The Sarbanes-Oxley Act, which was enacted July 30, 2002 in response to the Enron and WorldCom scandals, gives extended powers to the Securities and Exchange Commission. It was enacted to provide investors with accurate and timely disclosure of financial and other important data of public companies and to ensure that audits of this financial data are performed according to accepted standards and by independent accounting firms. The Compliance requirements of this act should reduce the occurrence of future abuses and scandals. (Peluso, Mar 2004)
In the Article Will Sarbanes-Oxley Improve Ethics?' Most of the emphasis was on how the different sections of Act would improve on the ethical issue affecting companies today. For example, Section 406 of SOX requires all public companies to have a code of conduct for senior management and financial officers that contains appropriate compliance and enforcement procedures, further requirements to the code also covers all directors, officers, and employees. This is an attempt for companies to become aware of their own policies; to often companies have their own code of conduct but they are just words that make it into a manual and eventually become meaningless.
Also the SEC Chairman William Donaldson addressed the importance of ethics in corporate governance as well as the importance of the board of directors. He has advised that companies, management, directors, and the gatekeepers who serve them must go beyond simply conforming with the letter of the new laws and regulation that have been adopted in response to corporate scandals. In a speech at the 2003 Washington Economics Policy Conference, he encouraged boards to "define the culture of ethics that they expect all aspects of the company to embrace. The philosophy that they articulate must pertain not only to the board's selection of a chief executive officer, but also to the spirit and very DNA of the...