[Accounting Advice] Chris, a Newly Hired Certified Public Accountant, Was

Multiple Choice

[Accounting Advice] Chris, a newly hired Certified Public Accountant, was asked by a business client, a chief executive officer, about the effect of the Sarbanes-Oxley Act on an accounting issue. Chris assured the client that the client should not be concerned about the act because it is very vague, unspecific, and difficult to understand. Chris also told the CEO that the CEO could not be held personally responsible, regardless of what happened, because only company business was involved. Finally, Chris told the CEO that there is no oversight involved with the act. Later that same day, Chris's coworker discovered that the CEO had been involved in misstating some financial reports and had also destroyed financial documents to cover up fraud. An employee at the company, Olivia, had informed the coworker as well as the SEC. When the issue was mentioned to the CEO, he immediately fired Olivia.
-Which statement is true regarding Chris's statement that the CEO could not be held liable for violations of the act?

A) Chris is correct. Under no circumstances can a CEO be held personally responsible for violations under the act. Any fines would be imposed upon the business entity.
B) Chris is incorrect. The act provides for harsh penalties, and a CEO who knows that the company's financial reports are incorrect but claims that they are truthful, can be heavily fined. There are no penalties, however, for destruction of financial documents.
C) Chris is incorrect. The act provides for harsh penalties, and a CEO who destroys or changes financial documents to mislead can be heavily fined. There are no penalties, however, for misstatements of a company's financial reports because the company is solely responsible for its statements.
D) Chris is incorrect, but any fine against a CEO under the act cannot exceed a nominal amount of $1,000.
E) Chris is incorrect. The act provides for harsh penalties, and a CEO who knows that the company's financial reports are incorrect, but who claims that they are truthful, can be heavily fined. Additionally, a CEO who destroys or changes financial documents to mislead can be heavily fined.