CEO and CFO Certification

The chief executive and chief financial officer sign a statement attached to the annual or quarterly report. They typically confirm that they have reviewed it, that it contains no material untrue statement or omission, that the figures fairly present the company’s position, and that they are responsible for the controls behind the numbers. They also confirm that they have told the auditors and the audit committee about significant control weaknesses and any fraud involving management or key staff. The best-known regime is the United States Sarbanes-Oxley Act for listed companies, but other countries ask for similar sign-offs to the board or regulator. Many groups run sub-certification, where divisional heads sign to the CFO first. A false certification can bring fines, prison, loss of bonuses and removal from office. Executives who sign cannot later say they never saw the problem.

A listed retailer prepares its annual report. Before the CEO and CFO sign, each regional finance head certifies that local books were closed properly and that no unusual adjustments were made without approval. The CFO reviews a summary of control deficiencies, including one reconciliation backlog, and discloses it to the audit committee. Both executives then sign, knowing that a later restatement caused by known issues would expose them personally.