CHAPTER 7: ACCOUNTING, RECORDS, AND ASSOCIATED REGULATIONS
Full, fair, accurate, timely, and understandable disclosure in the periodic reports required to be filed by the issuer [corporation]; and Compliance with applicable governmental rules and regulations. The importance of this provision for AR managers is twofold: { With a code of ethics to reference, AR staff has a federally mandated reason to resist pressure from executives who may want the professional to engage in a questionable practice. { The code of ethics should serve as a framework for the specifics in the AR policy manual. Whistleblower Protection There are many laws, including SOX, that protect those who disclose improper accounting and other issues of fraud, abuse, and mismanagement—giving them a secure place to go: the audit committee of the board of directors. SOX legislation stipulates that each audit committee must establish procedures to: Receive, retain, and treat complaints; and Handle whistleblower information regarding questionable accounting and auditing matters. Employees also are protected from “retaliation in fraud cases.” Companies cannot “discharge, demote, suspend, threaten, harass, or in any manner discriminate against” an employee who assists in a fraud investigation by federal authorities, Congress, or “a person with supervisory authority” over the employee. The penalties for retaliating against a whistleblower also are defined. Whistleblowers can get back their old jobs and titles and receive back pay with interest. They also may get the corporation to pay for their court costs, expert witness fees, and “reasonable” attorney bills. CEOs and CFOs Must Certify That Internal Controls Are in Place Chief executive officers and chief financial officers at SEC-regulated firms must personally certify each quarterly and annual report that the corporation files with the SEC. They must certify that: The signing officer has reviewed the report; The report does not contain untrue statements or material facts or omit such facts; and The financial statements fairly represent the financial condition and results of the operations. Other provisions, however, have a potentially greater impact on AR. These provisions are related to internal controls, and require that CEOs and CFOs must also certify that they: Are responsible for establishing and maintaining internal controls; Have designed internal controls to ensure that material information relating to the company and its subsidiaries is made available to the officers of the company; Have evaluated, within 90 days of the certification, that the internal controls are effective; and Have presented in the report their conclusions about the effectiveness of the internal controls. The CEO and CFO must also keep the auditors and audit committee informed about internal controls. The law mandates that the CEO and CFO must certify that they have disclosed to the auditor and audit committee “all significant deficiencies in the design or operation of internal controls which could adversely affect” the corporation’s ability to “record, process, summarize, and report financial data.” That means that CEOs and CFOs are certifying that the internal controls are working well in areas such as the billing and AR departments.
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THE ACCOUNTS RECEIVABLE SPECIALIST CERTIFICATION PROGRAM E-TEXTBOOK
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