Video: SOX 2002 Penalties

In this lesson, Nick Palazzolo, CPA, makes sense of the severe penalties associated with the Sarbanes-Oxley Act of 2002. With a touch of humor to lighten the subject, Nick delves into the significant prison sentences and fines imposed for various infractions, such as document forgery and failure to retain audit work papers for the mandated seven years. He also explains the statute of limitations for securities fraud, reinforcing the importance of remembering key timelines for compliance. Through Nick's guidance, grasping these legalities becomes a less daunting, more memorable task.

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Video Transcript

Instructor: Nick Palazzolo

Nick Palazzolo is head instructor of ExamPrep.ai CPA Review. Nick's teaching style is engaging & upbeat, combining practical Big 4 tax & assurance expertise with years of 1-on-1 coaching. His lessons are concise and emphasize what you need to know to pass. Whether you're a recent grad or working full-time, we’re confident you can conquer your CPA exams with Nick’s review.

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Alright, now, lots of memorization, as you are quite well aware, on this exam. Just some dates. So not dates, timelines, I guess. What do we need to memorize here? Well, if you were to alter or forge any documents relating to the proper implementation of securities, you're going to get a good 20 years in prison.

That does not sound fun, but if you want to get a little less time, ten years. And what do you have to do to get ten years in prison? Ten years if you're an auditor for not retaining your work papers for seven years after the end of the fiscal period. So if I audit and I am auditing, the end of 2021, right? So we've got the end of 2021.

This is the 2021 audit. I need to now hold these work papers for, say it with me, seven years. Otherwise they'll throw me in the big house for ten years and I do not want to be there. I want to be able to run around and teach some CPA content. That is something to be aware of.

Just memorize these dates, everyone. Now, the statute of limitations, for those of you not familiar with the statute of limitations is that's essentially for how long they can come after you, applies to any sort of legal, legal situation. If you steal something, there's a statute of limitations on that. Maybe they can only come after you for another three years and then it's been too long, essentially. So the statute of limitations, FAR securities fraud is no later than the earlier of two years after the discovery of facts, constituting the violation or five years after the violation.

Things to memorize, I'd say these two are more important. But hey, this test is going

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Identify Risk During Planning

Module: 5 Concepts, 62 Videos

Fraud & General Risk at All Levels Overview

0:22

Fraud & General Risk at All Levels Objectives

1:19

Introduction to Fraud and General Risk at All Levels

2:04

The Fraud Triangle