Section 405 CAMA 2020

Section 405 Companies and Allied Matters Act is about Corporate responsibility for financial reports. It is under Chapter 15 (Audit) of the Act.

(1) The chief executive officer and chief financial officer of a company other than a small company or persons performing similar functions shall certify in each audited financial statement that the—

(a) officer who signed the audited financial statements has reviewed them, and based on the officer’s knowledge the—

(i) audited financial statements do not contain any untrue statement of material fact or omit to state a material fact, which would make the statements misleading, in the light of the circumstances under which such statement was made, and

(ii) audited financial statements and all other financial information included in the statements fairly present, in all material respects, the financial condition and results of operation of the company as of and for,the periods covered by the audited financial statements ;

(b) officer who signed the audited financial statements—

(i) is responsible for establishing and maintaining internal controls andhas designed such internal controls to ensure that material information relating to the company and its subsidiaries is made known to the officer by other officers of the companies, particularly during the period in which the audited financial statement report is being prepared,

(ii) has evaluated the effectiveness of the company’s internal controls within 90 days prior to the date of its audited financial statements, and

(c) officer who signed the audited financial statements disclosed to thecompany’s auditors and audit committee—

(i) all significant deficiencies in the design or operation of internal controls which could adversely affect the company’s ability to record,process, summarise and report financial data, and has identified for the company’s auditors any material weaknesses in internal controls, and

(ii) whether or not, there is any fraud that involves management or other employees who have a significant role in the company’s internal control ; and

(d) officer who signed the report, has indicated in the report, whether ornot, there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

(2) Where a managing director, chief financial officer or person performing similar functions fails to discharge the duty imposed on him under this section, he commits an offence and is liable on conviction to a penalty as the Commission shall specify in its regulations.