Discussion Responses

Running head: SARBANES-OXLEY AND ETHICS

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SARBANES-OXLEY AND ETHICS

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Title Sarbanes-Oxley and Ethics

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Sarbanes-Oxley and Ethics

The Sarbanes-Oxley is an act passed by the Congress of the US in the year 2002. The act required companies to make public financial disclosures and prevent accounting fraud. The main aim of the Sarbanes-Oxley Act was to protect investors and business owners from suffering losses due to fraudulent corporations and employees. The cause of the enactment of the act was serious of serious ethical and financial misconduct activity reports such as WorldCom and Tyco. Ethics, on the other hand, describe a fundamental code of conduct that describes the do’s and dont's by which a specific setting operates. The Sarbanes-Oxley Act has helped a great deal to restore ethics to the business setting and to restore in turn the investor confidence that had earlier on been in the fall.Initially, enacting the Sarbanes-Oxley was seen as burdensome, but as time progressed, its importance became evident, and the act gained a lot of support and popularity.

The Sarbanes-Oxley act has helped the management of companies to see their weaknesses and gaps. Since then, companies have adjusted by reducing unnecessary complexity in their operations which were a breeding ground for fraud and other forms of misconduct, making communication between staff and management and among the staff easier,the act has also enabled company management officials to realize the importance of enforcing the set policies and to adopt a feeble compliance culture. Some of the benefits of the act included automation of manual processes, reducing a number of handoff’s and reducing inconsistencies in data definitions. Sarbanes-Oxley has indeed been successful in solving the financial crisis since its enactment.

Ethics are a matter self-drive. However, there required a set of rules and regulations to define the ethics to help a self-driven person remain on their toes. Therefore, as much as self-drive is the first and most important thing in ethics, laws are equally important.

References

Educating and Researching Sarbanes Oxley. (2006). Accounting Forum, 30(3), 315. http://dx.doi.org/10.1016/j.accfor.2006.05.002

Ray, J. Assessing the Success of Sarbanes-Oxley. SSRN Electronic Journal. http://dx.doi.org/10.2139/ssrn.2103555

Sarbanes Oxley section 404 implementation discussion with FEI companies. (2003).