Whistleblowing And Sarbanes Oxley Act

In addition, whistleblowers should be portrayed as being good in order for society to begin seeing them in a positive way. Furthermore, the government should make this type of crimes a public matter. Allowing the public to be able to see all charges and outcome regarding these cases could bring out other wrongdoings in other organizations. The government should also impose greater punishment such as jail time for these types of crimes rather than imposing fines that they are able to

Throughout history and in our own time, legitimate accounting methods have been utilized to fraudulently engage in manipulating activities that results in illicit gains to the perpetrators and losses to individuals and financial institutions.

In the past, many corporate executive have committed various forms scandals in their organizations. Such fraudulent arts are unethical and immoral behavior. This led the US government to form legislation in order to control fraudulent activities; mostly performed by senior officers in the organization. In view of this, this paper will address the following: historical summary on SOX enactment, the key ethical components of SOX, social responsibility implications regarding mandatory publication of corporate ethics, whether the criticisms of SOX implication presents an unfair burden on smaller organizations and suggestions on the improvement of SOX legislation.

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

Review “Just pucker and blow: An analysis of corporate whistleblowers” in Chapter 2. Please respond to the following:

Since the 1960s, the public value of whistle blowing has been increasingly recognized. Whistle blowing statutes protect from discharge or discrimination an employee who has initiated an investigation of an employer’s activities or who has otherwise cooperated with a regulatory agency in carrying out an inquiry or the enforcement of regulations. Many states have enacted whistle blower statutes, but these statutes vary widely in coverage. Some statutes apply only to public employees, some apply to both public and private employees, and others apply to public contractors. Under the federal False Claims Act, any person with knowledge of false claims or fraud against the institution may bring a lawsuit in his or

Prior to the advent of the Sarbanes-Oxley Act of 2002, referred to herein as “SOX,” the board of directors’ pivotal role was to advise senior leaders on the organization’s strategy, business model, and succession planning (Larcker, 2011, p. 3). Additionally, the board had the responsibility for risk management identification and risk mitigation oversight, determining executive benefits, and approval of significant acquisitions (Larcker, 2011, p. 3). Furthermore, for many public organizations, audit committees existed before SOX and provided oversight of internal processes and controls. Melissa Maleske (2012) advised that the roles and responsibilities of the board were viewed “…from a perspective that the board serves management” (p. 2). In contrast, Maleske (2012) noted that SOX regulations altered the landscape “…to a perspective that management is working for the board” (p. 2). SOX expanded not only the duties of the board and the audit committee, but also the authority of these bodies (Maleske, 2012, p. 2).

White collar crime has been around for ages. Today more and more news stories can be found where the elite, the top executives of fortune 500 companies, are being prosecuted for participating in illegal activities. It was hoped that the passing of the Sarbanes Oxley Act of 2001 after the Enron debacle would reduce the amount of illegal acts being committed in corporate America. The Sarbanes Oxley act makes executives personally responsible for their activities requiring top management to sign off on financial statements stating they are true and accurate and these executives can face jail time for committing fraudulent acts. Unfortunately, immorality in business is still running rampant. One illegal practice we see happening in

Duska argues that whistleblowing is always justified. He claims that employees do “not have an obligation of loyalty to a company, even a prima facie one, because companies are not the kind of things that are properly objects of loyalty” (Duska, pg. 424). Duska denies one of Bok’s key conditions to blow the whistle, loyalty. This is because Duska sees the purpose of business is to produce goods and services and to make a profit. Duska’s view of a business’s purpose prevents the company, or in Case C the university, from becoming an object deserving of loyalty.

The Sarbanes-Oxley Act was signed into law on July 30, 2002, by President George W. Bush; it was a congressional regulatory response to the enormously damaging corporate scandals at WorldCom, the Arthur Anderson accounting group and most notoriously, Enron. Because of the damage done not only to the reputations of those corporations and to the American corporate community but also to the stockholders and people who lost life savings (people who lost 401-K investments in the scandal), Congress had to take action to try and avoid scandals like these in the future. Hence, the Sarbanes-Oxley Act was created and passed into law. Will it deter future criminal activity vis-à-vis corporate financial reporting? There is no guarantee that the Act will prevent future corruption, but this paper asserts that the Sarbanes-Oxley Act is a step in the right direction.

When revisiting some history where scandals have taken place such as Enron or WorldCom, it became necessary for stronger controls to be put in place and have all people involved held accountable for their actions. It is for this reason that Sarbanes-Oxley Act is in place. It has not stopped fraud from occurring; however, it does create a deterrent. In reading about the Societe Generale fiasco poor IT security is the focal point in this fraud. Stronger security controls will be the only way fraud of this magnitude will not take place again.

Jackson and Raftos (1997) referred to whistle blowing as an avenue of last resort. Employees find themselves in these situations when the authorities at their organisations have failed to take actions on reported issues affecting that organisation. Wimot (2000) likened whistleblowing to a spectrum. At one end of this spectrum whistleblowing would only cause minimal pain and scars on the stakeholders and organisation while on the other end is the worst scenario where the whistleblowing effects are turbulent and often experienced to be negative to all those involved (ibid).

The Sarbanes-Oxley Act of 2002 was designed to create oversight and decrease the amount of corruption in the accounting industry. The Article includes a number of provisions dealing with financial reporting, conflicts of interest, corporate ethics and the oversight of the accounting profession, as well as establishing new civil and criminal penalties.

The whistleblower him or herself must be carefully scrutinized. What are the personal and the professional reputations of the whistleblower? What is the motive driving the whistleblower? Is it to benefit the client or the organization, or is it a need for attention or revenge? Is the whistleblower's cause seen as legitimate and significant by trustworthy colleagues and friends? Is the whistleblower aware of the potential consequences of blowing the whistle and still willing to accept responsibility for actions taken?

Whistleblowing occurs when an employee, contractor or supplier goes outside the normal management channels to report suspected wrongdoing at work. A study indicates that no specific actor dominates the revelation of fraud: “short sellers and equity holders revealed the fraud in 9% of the cases; financial analysts and auditors revealed 14% each; the Securities Exchange Commission (“SEC”) accounted for 6%; the media accounted for 14%; non-financial market regulators 16%; and employees (whistleblowers) accounted for 19%. The United States enacted sweeping legislation to protect whistleblowers after a series of corporate scandals, but more is needed. Since whistleblowing plays an important role in the corporate regulatory scheme, this paper will explore policies needed for a more effective corporate governance.