What is the primary requirement of the Sarbanes-Oxley Act of 2002?

The primary requirement of the Sarbanes-Oxley Act of 2002 is that it mandates that CEOs and CFOs personally certify the accuracy and completeness of the financial reports of their companies. This certification is crucial because it holds top executives accountable for the financial disclosures made to investors and regulatory agencies. By requiring these officers to sign off on the financial statements, the act aims to enhance the reliability of financial reporting and restore public confidence in the accuracy of corporate financial information.

This requirement was implemented in response to financial scandals and corporate fraud that eroded trust in financial markets. The act introduces stringent penalties for false certifications, thereby reinforcing the importance of truthful and accurate financial disclosures in maintaining the integrity of the financial reporting process.