Sarbanes-Oxley's Code Of Ethics

“Analytically, a corporation’s code of ethics is the documented, formal, and legal manifestation of that organization’s expectations of ethical behaviors by its employees” (Adelstein & Clegg, 2016, p. 55). The corporate credos and code of conducts provide employees with an understanding of the policies of the organization and the organizational ethical position. For these codes to be effective, all employees of the organization must be aware of them. The visibility of the code of conduct that enables the organization to be judged as ethical.

A company must have an effective ethics program to ensure that all employees understand its values and comply with the policies and codes of conduct that create its ethical culture (Ferrell, Ferrell & Fraedrich, 2008, p. 211). In order to develop an effective ethics program, it must contain certain items. It must first have a code of conduct

Lack of integrity, incomplete discloser, and unwilling to speak the truth are all scopes of dishonesty (Ferrell, Fraedrich, & Ferrell, 2013). Some businesses prompt and participate in dishonorable activities through unethical behavior. This is the very reason why today’s economy faces financial disaster. The Sarbanes-Oxley Act appears to have a strong grasp on controlling the financial environment in organizations; however, other financial disasters will more than likely hit home. Because these transgressions will emanate additional legislation might greatly prevent future misconducts. For this reason, legislations continue to recover with up-to-date implementations.

After major corporate accounting scandals, especially from Enron and WorldCom, Congress enacted the Sarbanes-Oxley Act of 2002. It is a United States federal law that set corporate governance over U.S. Public Companies. The bill contains eleven sections which hold a public corporation’s board of directors’ accountable, created criminal penalties for certain misconduct, and created regulations to define how public corporations are to comply with the law. Even though it was enacted almost fifteen years ago there is still debate and controversy. Even now there is talk about Congressional Republicans aiming to loosen a provision of Sarbanes-Oxley, which was introduced in the Financial Choice Act by Jeb Hensarling (R., Texas), the chairman of the

he Securities and Exchange Commission was the two major Securities Act created by Congress in the 1930's to help the public and investors reconstruct their trust toward the securities market as the Stock Market Crash in 1929 had an effect on the public of the United Stated at the time(The Investor's Advocate,2013). The U.S. Securities and Exchange Commission is a federal agency, utilize the force of actions to enact federal securities laws, control regulation by rules, principles and adjust to standard requirements; the main purpose is to make sure the operation is accurate. In an effort to secure confidences and the reputation of the accounting professions, the Congress established the PCAOB which is supervised by the SEC to support the accuracy

As the complexity of our financial economy develops it is important that our accounting standards progress in accordance. Accounting is very important to the development of the global and local economies. Accounting is basically the gathering, summarizing and presenting of financial information of an entity to interested internal, external and possible investors. This information should be presented in a non-bias way so that other people are able understand.

Before 2002, shocking scandals in the stock markets generated substantial losses to investors and, for a time, the United States economy was in near chaos. Enough evidence of impropriety, financial statements, market analysts, politicians and company executives, emerged to increase investor skepticism for a long time (Larson, Thompson and Walters, 2004). The primary focus of this problem was the concerns regarding the ethical behavior of business enterprises and the effectiveness of accounting and auditing norms (Larson et al. 2004). The Sarbanes-Oxley Act of 2002 was signed into law by President George W. Bush to enhance the public's confidence in the accounting profession (Larson et al., 2004). This Act, considered one of the most noteworthy

The values that resonate with me the most are respect, honesty, equality, responsibility and trustworthiness.

In July 2002, the United State Congress passed a legislation known as the Sarbanes-Oxley Act (often shortened to SOX). The act was drafted by United States congressmen Paul Sarbanes and Michael Oxley and was aimed at improving corporate governance and accountability. This legislation was passed to protect the general public and shareholders from fraudulent practices and accounting errors in the enterprise, in addition to improving the accuracy of corporate disclosures. The United States Securities and Exchange Commission (SEC) administers the act, which sets publishers rules on requirements and deadlines for compliance (Rouse, n.d.).

Every company should have a code of ethics, because it maintains the company’s values, culture, and reputation. It communicates to employees that the company is committed to doing business responsibly. It also guides employees’ conduct and how they should interact with each other, customers, vendors, contractors, and the general public. Code of ethics set clear standards and expectations for employees, and if everyone in the company adheres to these policies, then the company will create a culture that reflects the code. Companies with code of ethics also show that they are committed to integrity and social responsibility, which in turn will make their customers feel more reassured, and help with the company's bottom line as well as protect the company from potential liability.

Most organizations implement a code of ethics to establish proper standards and procedures for line managers and employees. Additionally, Dowlen and Festing et al., ‘‘HR professionals have an important role to play in instituting a strategic plan for legal compliance and developing corporate codes voluntary compliance’’ (p. 271). Ideally, a well-written code of ethics will provide guidance and understanding on how staff members should handle certain situations. For example, Lisa Magloff from Chron Business, states that ‘‘The Kraft code of ethics contains just 10 short rules of ethical behavior that all employees must follow. The introduction to the Kraft code of ethics suggests that employees should let values guide their actions

Has the U.S. Corporate Sentencing Guidelines or the Sarbanes-Oxley Act promoted ethical behavior by employees, or have firms only been interested in avoiding or reducing jail time for their executives?

Sarbanes-Oxley Act was enforced in the past but caught everyone’s attention when drastic audit failures from Enron and Worldcom happened. An enhanced act (SOX) was enacted in 2002 improving audit quality. In particular, section 404 provides guidance of assessment to internal control. For an accounting perspective, internal control is a system for internal and external auditors to measure performance and recommend the improvement of the control. It is definitely correct that both enforcement and the system are to address the risks of frauds. In the meantime, a new regulatory agency, the Public Company Accounting Oversight Board (PCAOB) was created to monitor the work of public accountants. Among SOX and the PCAOB, accounting

The company has an obligation to their clients to protect their information and prevented their employees from committing fraud against their customers. Per Burnoski (2015) “When things are going well, people don’t really think about fraud, and that’s a good opportunity for certain motivated people to commit fraud (Burnoski, 2015).” During the years that the employees and managers were conspiring to boost their sales goals and hit unrealistic quotas should have been a red flag for companies to perform an audit. The CEOs knew when they set the goals that were pushed to the sales team, the goals were extremely hard to obtain. Once they realized several teams across the company were making their sales quota, an investigation should have been launched.

Board members duty is to guard the best interest of an organization. There are three laws in place that a board member must follow. First, the duty of care involves the board member carry out their managements responsibilities and comply with the law in the best interests of the corporation. Next, the duty of good faith requires board members to be faithful to organization mission and values. Lastly, the duty of loyalty requires a board member must give undivided commitment when making decisions affecting the organization. The Sarbanes -Oxley act was passed in 2002 by the U.S. government to protect investors from accounting scandals and fraud. Furthermore, the Sarbanes Act requires public companies to establish a code of conduct for top executives.