SEC order takes effect August 14
By SAM GARCIA
7/29/2002

Top executives of the nation's largest companies will soon be required to certify the financial statements of the companies they head. The requirement follows a wave of accounting scandals that have shaken investor confidence and sparked political actions.

The Securities and Exchange Commission (SEC) recently issued an order that will require the chief executive officers (CEO's) and chief financial officers (CFO's) of 945 publicly traded companies to certify -- in writing and under oath -- "that their most recent reports filed with Commission are both complete and accurate."

The SEC's sworn statement requires the CEO's and CFO's to attest that no covered report filed by their companies contains an untrue statement of a material fact. Covered reports include the Annual Report on Form 10-K, the reports on Form 10-Q, the reports on Form 8-K and all definitive proxy materials filed with the SEC after the filing of the most recent Form 10-K.

In addition, the executives must attest that "no covered report omitted to state a material fact necessary to make the statements in the covered report, in light of the circumstances under which they were made, not misleading as of the end of the period covered by such report." Executives unwilling to attest must explain why such a statement would be incorrect.

The SEC says it will publish the certifications online. The SEC is launching a new Web site, as early as Monday, that keeps tabs on hundreds of top officers who are under orders from the commission to comply with the new certification mandate, according to an article in the Wall Street Journal today.

Executives must declare whether or not the contents of the statements have been reviewed with their audit committees or, in the absence of an audit committee, the independent members of the board of directors.

The SEC order applies to companies with reported annual revenues in excess of $1.2 billion. The order goes into effect on the 14th of next month.

Neither Fannie Mae nor Freddie Mac are on the SEC's list of companies. The two government sponsored housing enterprises recently agreed to register some of their securities with the SEC. Previously, Fannie and Freddie were exempt from SEC requirements.

PNC Financial Services Group, Inc. recently settled issues related to questionable accounting practices with the SEC, the Federal Reserve Bank of Cleveland and the Office of the Comptroller of Currency. PNC is on the SEC's list.

Other mortgage companies listed include:

* Bank of America Corporation
* The Bear Stearns Companies Inc.
* Cendant Corp
* Centex Corp
* Citigroup, Inc
* Conseco Inc.
* Countrywide Credit Industries Inc.
* First Tennessee National Corp.
* General Electric Company (parent of GECC)
* General Motors Corporation (parent of GMAC)
* Golden West Financial Corporation (parent of World Savings)
* GreenPoint Financial Corp.
* H&R Block Inc. (parent of Option One Mortgage)
* Household International Corp.
* J.P. Morgan Chase & Co.
* Principal Financial Group Inc.
* U.S. Bancorp
* Washington Mutual Inc
* Wells Fargo & Company

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