February 5, 2007
Ethics in Accounting and Financial Decision Making
In his article, "Beyond Sarbanes-Oxley. Three best practices to adopt in your organization," the author, Neil S. Lebovits, suggests that organizations can do several things in order to ensure their ethical health. The top three practices suggested by Lebovits are to cultivate ethical role models, demonstrate ethical decision-making, and to encourage pushback. This paper will explore these three practices and examine the ways in which they relate or can be applied at my place of business.
The Sarbanes-Oxley Act ("SOX") of 2002 was enacted by Congress in order to provide the Securities and Exchange Commission with increased authority to monitor financial practices of and financial reporting by American public companies and public accounting firms, dictate the way American corporations are governed, and discipline those not in compliance. The Act also created a Public Company Accounting Oversight Board which is charged with monitoring and regulating the auditing practices of accounting firms. SOX addresses several accounting issues, including the financial auditing process and disclosure of financial information and was established in response to major scandals in a number of American corporations and accounting firms a few years back. SOX goes a long way toward providing financial practices and reporting guidelines for companies. Lebovits suggests that companies can and should do even more to ensure company personnel at all levels behave ethically. The first thing the author suggests companies do is to cultivate ethical role models. These role models should be natural influencers and should probably be part of or work closely with the financial departments of the company. These ethical role models would be openly rewarded for their behavior and perhaps influence others to follow suit. In my law firm, our accounting department is...