Introduction Part of the daily routine during childhood is learning the difference between right and wrong, and a child’s behavior will change as they grow older, which proves they understand being dishonest or lying is wrong and there will be consequences to pay. Regardless of a person’s surroundings, they should never put their integrity in jeopardy, however, more often than not greed prevails as the winner. Most people do not accept a position within an organization looking to become rich, seek sexual favors, or be corrupt. The temptation is in every organization and those who cannot resist temptation become Gonin, Palazzo, and Hoffrage (2012) the actors, who fill the role and offer solutions through their evil persuasiveness demeanor. These types of people are the reason for the Sarbanes-Oxley (SOX) Act and more government regulations on businesses and money deals. Those who keep their …show more content…
Each employee has a vested interest in the organization and failing to protect that very interest is wrong. Those who exercise the status-quo is just as guilty as those creating the wrongdoing. Furthermore, a crime is a crime and reporting wrongdoing within an organization is no different than reporting a bank robbery to law enforcement. Specifically, as a federal employee and working for the Department of Defense, each employee has the duty and responsibility to protect the property and equipment under their control, which each and every tax payer owns. Abusing, miss-using, or failing to protect military assets that the American people purchase is being dishonest to the tax payers. Each person has an implied duty and responsibility to report wrongdoing, whether at work or on personal time. Ultimately, failing to report puts the organizations core values at risk and the lives of others who trust one another on the battle
The Sarbanes-Oxley is a U.S. federal law that has generated much controversy, and involved the response to the financial scandals of some large corporations such as Enron, Tyco International, WorldCom and Peregrine Systems. These scandals brought down the public confidence in auditing and accounting firms. The law is named after Senator Paul Sarbanes Democratic Party and GOP Congressman Michael G. Oxley. It was passed by large majorities in both Congress and the Senate and covers and sets new performance standards for boards of directors and managers of companies and accounting mechanisms of all publicly traded companies in America. It also introduces criminal liability for the board of directors and a requirement by
The Sarbanes Oxley Act is an act passed by the United States Congress to protect investors from the possibility of fraudulent accounting activities by corporation. The Sarbanes Oxley Act has strict reforms to improve financial disclosures from corporations and accounting fraud. The acts goals are designed to ensure that publicly traded corporations document what financial controls they are using and they are certified in doing so. The Sarbanes Oxley Act sets the highest level and most general requirements but it imposes the possibility of criminal penalties for corporate financial officers. The Sarbanes Oxley Act sets provisions that are used throughout numerous amounts of corporations. It holds companies to a larger responsibility and a higher standard with accounting principles and the accuracy of financial statements.
The two regulatory requirements that my financial institution must consider before going public are The Gramm-Leach-Bliley Act, and Sarbanes-Oxley Act (SOX). The Gramm-Leach-Bliley Act is a law that requires financial institutions to explain their information sharing practices to their customers and to protect sensitive data. There are three requirements for the Gramm-Leach-Bliley Act, the first is that insurance companies, banks, and brokerage companies are required to secure stored personal financial information. Next the company must advise you on their policy on sharing vital information. The final requirement is that the company has to give the consumer the option to choose whether they want their personal financial information shared.
The Sarbanes-Oxley Act was passes in 2002 in response to a handful of large corporate scandals that occurred between the years 2000 to 2002, resulting in the losses of billions of dollars by investors. Enron, Worldcom and Tyco are probably the most well known companies that were involved in these scandals, but there were a number of other companies guilty of such things as well. The Sarbanes-Oxley Act was passed as a way to crackdown on corporations by setting new and improved standards that all United States’ public companies and accounting firms were and are required to abide by. It also works to hold top level executives accountable for the company, and if fraudulent behaviors are discovered then the executives could find themselves in hot water. The punishments for such fraudulence could be as serious as 20 years jail time. (Sarbanes-Oxley Act, 2014). The primary motivation for the act was to prevent future scandals from happening, or at least, make it much more difficult for them to happen. The act was also passed largely to protect the people—the shareholders—from corporations, their executives, and their boards of directors. Critics tend to argue that the act is to complicated, and costs to much to abide by, leading to the United States losing its “competitive edge” in the global marketplace (Sarbanes-Oxley Act, 2014). The Sarbanes-Oxley act, like most things, has its pros and cons. It is costly; studies have shown that this act has cost companies millions of
"The Public Company Accounting Reform and Investor Protection Act" was signed into law by President Bush on July 30, 2002. The law is now known as The Sarbane-Oxley Act (SOA). The SOA has eleven titles within the act and numerous sections, pertaining to ethics, accounting, financial reporting, responsibilities of officers, whistleblower protection, and increased criminal penalties built upon prior securities laws. SOA is the most comprehensive securities legislation written since the 1940s. In the early part of the twentieth century companies did not have the sophistication and abilities of the modern company in regard to information technology, number of accountants, advisors and analysts. This legislation is a big step
Sarbanes-Oxley Act (SOX) requires the financial reporting to be accurate within a business. This act does not currently affect the public health systems but the current system is beginning a flux towards applying this to non-profits. In an attempt to plan for the future it would be in the hospitals best interest to become SOX compliant. This will allow the hospital to be compliant when these changes finally do affect non-profit and public healthcare institutions. Sox is regulated and audited by Public Company Accounting Oversight Board (PCAOB). This organization was created specifically for SOX compliance and currently has no other mission.
The Sarbanes-Oxley Act, or SOX Act, was enacted on July 30, 2002. Since it was enacted that summer it has changed how the public business handle their accounting and auditing. The federal law was made coming off of a number of large corporations involved in scandals. For example a company like Enron was caught in accounting fraud in late 2001 when the company was using false financial statements. Once Enron was caught that had many lawsuits filed against them and had to file for bankruptcy. It was this scandal that played a big part in producing the Sarbanes-Oxley act in 2002.
On July 30, 2002, George Bush signed into law the Sarbanes-Oxley Act. This act was a product of the collapse of major corporations such as Enron, Global Crossing, Adelphia, and WorldCom. “All four companies allegedly hid their true financial conditions from creditors and shareholders until an inability to meet financial commitments forced these companies to restate earnings and reveal massive losses. The financial collapse of these corporations, a result of allegedly fraudulent accounting practices, created a ripple effect that weakened a stock market already deflated by both the bursting of the technology bubble in 2000 and investor uncertainty resulting from the terrorist attacks of September 11, 2001(Recine, 2002).” In order to prevent
Financial regulation is a critical aspect that helps the stakeholders to ensure that companies present accurate and reliable information to its stakeholders. In Dr. Jasso’s article “Sarbanes-Oxley-Context & Theory”, he addresses the Sarbanes-Oxley Act from a historical and philosophical context, where the firm is depicted by both philosophers which are Aristotle and Adam Smith. They are the leading thinkers on the concept of business and capitalism and how it impacts our society as a whole. Next, Dr. Jasso also examines the problems of market failure and information asymmetry, and he explains how these theories related to the SOX and corporation’s bad behaviors. Lastly, he analyzes the SOA from policy analyst’s perspective. Overall, the author argues that SOX is an effective and good legislation because it is a reactive policy that response to firm’s unethical and bad behaviors such as the accounting fraud on Enron, Adelphia, and Global Crossing. The author also believes that SOX will be continuing benefit the stakeholders such as the investors in the futures, and it will be cultivating good corporate ethical behaviors as well. I think that the
This memo is prepared to discuss voluntary adoption of Section of 404 of the Sarbanes-Oxley Act . I also want to explain the benefits of adopting these requirements.
The Sarbanes-Oxley Act of 2002 is one of the most important legislations passed in the 21st century effecting financial practice and corporate governance. This act was passed on July 30, 2002 thanks to Representative Michael Oxley a republican from Ohio and Senator Paul Sarbanes a democrat from Maryland. They both passed two different bills that pertain to the same problem which had to do with corporation's auditing accountability and financial fraud problems within corporations. One was bill (S. 2673) brought by Senator Sarbanes and the other bill (H. R. 3763) brought by Representative Oxley. Both bills where passed separately one by the house and the other by the
It has been over a decade since these regulatory tools took effect. Even though they helped to reveal fraud and unethical behaviors within organizations, it seems like there are still issues and things that need to be worked on. One of the negative aspects of Sarbanes-Oxley Act is that companies incurred significant costs to comply with its requirements. (Lawrence, 2013) A lot of companies believed that there were more costs than benefits from these implementations.
The Sarbanes-Oxley Act (SOX) was enacted in July 30, 2002, by Congress to protect shareholders and the general public from fraudulent corporate practices and accounting errors and to maintain auditor independence. In protecting the shareholders and the general public the SOX Act is intended to improve the transparency of the financial reporting. Financial reports are to be certified by the Chief Executive Officer (CEO) and Chief Financial Officer (CFO) creating increased responsibility and independence with auditing by independent audit firms. In discussing the SOX Act, we will focus on how this act affects the CEOs; CFOs; outside independent audit firms; the advantages and a
The second problem is public companies have always had to put up with more regulations than private ones because they encourage ordinary people to risk their capital. After the 2007-2008 financial crisis the regulatory burden has become heavier. America has introduced new rules, from the 2002 Sarbanes-Oxley legislation on accounting to the Dodd-Frank financial regulations of 2010. Sarbanes-Oxley increased the annual cost of complying with securities law from $1.1 million per company to roughly $2.8 million. The third problem is growing short-termism. The capital markets have increased their power dramatically with the rise of huge institutional investors and intensification of shareholder activism. Mutual funds count their money in trillions rather than billions. Hedge funds are not afraid to take on corporate Goliaths such as McDonald’s and Time Warner if they think they are failing. The average life expectancy of public companies shrank from 65 years in the 1920s to less than ten in the 1990s. The life expectancy of CEOs has also fell from 8.1 years in 2000 to 6.3 years in 2009. Investors have to right to fire managers because they own the company. Companies have to find a balance between the short and long term, satisfying the market’s demand for profits today, while planning for the future. Owners and regulators seem to be making it harder for bosses to look beyond quarterly earnings and board are devoting less time to strategy and more enforcing regulations. France’s
There is relatively little evidence on impact of internal control on mergers and acquisitions (M&A). This paper examine the relationship between internal control quality and M&A performance. Specially, this paper takes a look whether or not internal control impact differently on the performance of three types of M&A: horizontal mergers, vertical mergers and conglomerate mergers. The Sarbanes-Oxley Act of 2002 (SOX), also known as the Public Company Accounting Reform and Investor Protection Act and Corporate and Auditing Accountability and Responsibility Act, is a United States federal law that was pass setting forth a requirement that a large majority of publically traded firms had to periodically disclose information regarding their internal control environments.