What is required of CEOs and CFOs under the Sarbanes-Oxley Act (SOX)?

Under the Sarbanes-Oxley Act (SOX), CEOs and CFOs are mandated to sign and attest to the accuracy and completeness of financial statements. This requirement reinforces accountability at the highest levels of a company, ensuring that those responsible for financial reporting cannot claim ignorance of information that may mislead investors.

The rationale behind this provision is to enhance transparency and protect shareholders and the public from accounting fraud. By requiring these top executives to certify the financial reports, SOX aims to improve the quality of financial disclosures and restore confidence in the integrity of financial markets after a series of corporate scandals.

The other options, while they may be relevant to corporate governance or financial operations, do not align with the specific legal requirements instituted by SOX regarding executive accountability for financial reporting. For instance, attending board meetings and preparing budgets, while important, are not mandates under SOX. Similarly, while disclosing stock trading activities is a good practice for corporate governance, it is not a direct requirement of the act itself.