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Corporate And Criminal Fraud Accountability Section 801 & 802 Of Sarbans Oxley Act, 2002
1. CORPORATE AND CRIMINAL
FRAUD ACCOUNTABILITY
(SECTION 801 & 802)
1 Vishnu Kesarwani
IMS2007011
2nd Semester
MS (Cyber Law & Information Security)
IIIT-Allahabad
2. CORPORATE AND CRIMINAL
FRAUD ACCOUNTABILITY
Chapter 8 of THE SARBANES OXLEY ACT OF 2002 states
about the corporate and criminal fraud accountability.
This chapter contains 7 sections from section 801 to section
807.
There are two key sections in this chapter that are following :
Section 801 : Short Title that states :
“This title may be cited as the ‘‘Corporate and Criminal Fraud
Accountability Act of 2002’’. 2
3. CRIMINAL PENALTIES FOR
ALTERING DOCUMENTS(SEC. 802)
This section amends Chapter 73 of title 18, United
States Code by adding at the end the following:
§ 1519. Destruction, alteration, or falsification of
records in Federal investigations and bankruptcy
§ 1520. Destruction of corporate audit records
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4. DESTRUCTION, ALTERATION, OR FALSIFICATION
OF RECORDS IN FEDERAL INVESTIGATIONS AND
BANKRUPTCY
Section 1519, Chapter 73 of title 18, United States Code
states:
Whoever knowingly
alters,
destroys,
mutilates,
conceals,
Covers up,
falsifies, or
makes a false entry
in any
record,
document, or
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tangible object
5. CONTD…
with the intent to
impede,
obstruct, or
Influence
the investigation or proper administration of any matter
within the jurisdiction of any department or agency of the
United States or
any case filed under title 11, or
in relation to or contemplation of any such matter or case,
shall be fined under this title, imprisoned not more than 20
years, or both. 5
6. DESTRUCTION OF CORPORATE AUDIT
RECORDS
§ 1520. Chapter 73 of title 18, United States Code
states :
(a)(1) Any accountant who conducts an audit of an issuer
shall maintain
all audit or review work papers
for a period of 5 years from the end of the fiscal period in
which the audit or review was concluded.
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7. CONTD…
(a)(2) The Securities and Exchange Commission shall promulgate,
within 180 days
after adequate notice and
an opportunity for comment
relating to the retention of relevant records such as
work papers,
documents
that form the basis of
an audit or review
memoranda
correspondence
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communications
other documents, and records (including electronic records)
8. CONTD…
which are
created,
sent, or
received
in connection with an audit or review and
shall contain
conclusions,
opinions,
analyses, or
financial data
relating to such an audit or review,
which is conducted by any accountant who conducts an audit
of an issuer of securities
8
9. CONTD…
The Commission may
amend or
supplement
the rules and regulations that it is required to promulgate
under this section, after
adequate notice and
an opportunity for comment,
in order to ensure that such rules and regulations adequately
comport with the purposes of this section.
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10. CONTD…
§ 1520.(b) states :
Whoever knowingly and willfully violates
subsection (a)(1), or
any rule or regulation promulgated by the Securities
and Exchange Commission under subsection (a)(2),
shall be fined under this title, imprisoned not more than
10 years, or both.
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11. CONTD…
§ 1520.(c) states :
Nothing in this section shall be deemed to diminish
or relieve any person of any other duty or
obligation imposed by Federal or State law or
regulation to maintain, or refrain from
destroying, any document.
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12. CLERICAL AMENDMENT
(SECTION 802 (B) )
The table of sections at the beginning of chapter 73 of
title 18, United States Code, is amended by adding at
the end the following new items:
1519. Destruction, alteration, or falsification of
records in Federal investigations and bankruptcy.
1520. Destruction of corporate audit records.
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13. CONCLUSION
Companies must ensure their records are
authentic, consistent, and incontrovertible.
They must have policies in place and that are
enforced to ensure appropriate record retention
and security.
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14. REFERENCES
THE SARBANES OXLEY ACT, 2002
Brown, Kaarst, IT Governance and Sarbanes-Oxley: The
Latest Sales Pitch or Real Challenges for the IT Function?
Available from
ieeexplore.ieee.org/iel5/9518/30166/01385722.pdf?arnumber
=1385722
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