Jack Weston,the CEO of Evans,Inc.,along with Evans' CEO,Jason Stiller,used non-GAAP numbers to develop the earnings statements for Evans for 2016.The result was that the earnings for Evans were 16% higher in the financial reports than they actually were.Executive compensation at Evans is tied to earnings,and Jack and Jason's bonuses for 2016 were 26% higher than in 2015 because of the jump in earnings that were later discovered to be fabricated using non-GAAP methods.Which of the following is correct?
A)As long as the shareholders approved the pay packages for Jack and Jason, there is no action that they can take on the compensation.
B)Under Dodd-Frank, Jack and Jason will be required to pay back the extra compensation they received as a result of the falsified earnings.
C)Under Dodd-Frank, the auditors are liable for the falsified earnings, not the CEO or CFO.
D)both a and c

Question

Jack Weston,the CEO of Evans,Inc.,along with Evans' CEO,Jason Stiller,used non-GAAP numbers to develop the earnings statements for Evans for 2016.The result was that the earnings for Evans were 16% higher in the financial reports than they actually were.Executive compensation at Evans is tied to earnings,and Jack and Jason's bonuses for 2016 were 26% higher than in 2015 because of the jump in earnings that were later discovered to be fabricated using non-GAAP methods.Which of the following is correct?​
A)​As long as the shareholders approved the pay packages for Jack and Jason, there is no action that they can take on the compensation.
B)​Under Dodd-Frank, Jack and Jason will be required to pay back the extra compensation they received as a result of the falsified earnings.
C)Under Dodd-Frank, the auditors are liable for the falsified earnings, not the CEO or CFO.
D)both a and c

Quizplus · Accepted Answer

Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, executives are required to pay back any compensation they received based on inaccurate financial statements, regardless of fault. This includes earnings that were inflated through methods not compliant with generally accepted accounting principles (GAAP).