The Sarbanes-Oxley Act And Ethical Decisions

Sarbanes-Oxley Act and Ethical Decisions
XXXXXXXXXXXXXXX
LAW/421
October 16, 2014
XXXXXXXXXXXXXXX
Sarbanes-Oxley Act and Ethical Decisions “Ethics is knowing the difference between what you have a right to do and what is right to do,” Potter Stewart. We all know right from wrong, unfortunately, in most fraud cases, greed and or desperation can be a great influence in the decision we make when handling confidential information or the financials of others.
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. Both politicians passed two different bills that dealt with the same problem of corporation 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 senate. After the WorldCom revelation of overstating its earnings by more than $72 billion dollars during a five quarter time frame, the house and the senate decided to form a conference committee to bring both bills together to form a stronger one. The conference committee approved the final bill on July 24th, 2002, giving it the name of "the Sarbanes-Oxley Act of 2002" and on July 30th, 2002, President Bush signed it making it a law.
When a business has internal controls it protects itself from external and internal theft, it ensures that all employees or representatives conduct business in a professional environment based on ethics and decisions are made always within the law. Internal controls reduce errors or irregularities in the accounting process which could be viewed as misrepresenting the company’s true financial status. By having all the checks and balances in place, a company will have less chance of hiring an employee who may commit fraud, protecting the company investors and establishing its commitment to following protocol, rules & regulations and simply, the law.
Sarbanes-Oxley Act protects against financial statements fraud in the United States, as personified by WorldCom and Enron, just to mention two. Companies with dishonest or incompetent executives will have fraud problems regardless of what the legislation says. The Sarbanes-Oxley Act establishes a set of rules which companies need to follow in regards or the reporting, paperwork and checks and balances when it comes to verifying report information. When the financial reporting is signed at the end of the reporting period, signing the report makes the executive accountable for the accuracy of the numbers being presented, having to trust those under the executive will make hiring practices more stringent and detailed when it comes to background checks and ability to perform within the law and ethically. In essence, any misdoing by any of the lower executives or employees will be the responsibility of the power of signature executive.
Section 802 Criminal Penalties for

Show More

Law 421

The Role And Functions Of Law: Law 421

Law 421 Week 2

Role And Functions Of Law Paper: Law 421

Law 421 Week 1 Dq1 Essay

Law 421 Week 2 Team Assignment Essay

Law 421 Week 2 Student Reflection Paper

Crime In The Renaissance Era

International Legal and Ethical Issues Essay

Whitten Case Study