When assessing the effectiveness of internal control over financial reporting and compliance with financial-related laws and regulations, management must follow the assessment process contained in Appendix A. Annually, management must provide assurances on internal control in its Performance and Accountability Report, including a separate assurance on internal control over financial reporting, along with a report on identified material weaknesses and corrective actions.

WHITEHOUSE: OMB Circular A-123 - Management's Responsibility for Internal Control | The White House

They require knowledge of and compliance with laws and regulations governing financial accounts and transactions.

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Management is responsible for establishing and maintaining internal control to achieve the objectives of effective and efficient operations, reliable financial reporting, and compliance with applicable laws and regulations.

WHITEHOUSE: OMB Circular A-123 - Management's Responsibility for Internal Control | The White House

If they do not aggressively enforce laws and regulations governing financial institutions, they endanger the entire system.

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Second, Chavern says, the laws and regulations surrounding the financial community were cobbled together in the wake of crises.

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The Olympus affair is likely to set in train a fairly thorough and far-reaching strengthening and tightening of Japanese codes of conduct, laws and regulations, and criminal and civil remedies to deal with false financial reporting, non-disclosure, and due diligence requirements for company auditors, and stricter and more intrusive regulation by government agencies and securities exchanges.

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The various laws and regulations have all changed over time to incorporate modern financial theory, including the idea that investing for income is the inappropriate investment policy.

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The next fiasco for the Securities and Exchange Commission may prove to be its systematic failure to address the insinuation into the U.S. capital markets of financial products that, by their reckoning, do not conform to American securities laws and regulations.

CENTERFORSECURITYPOLICY: The SEC's next shoe