Sarbanes-Oxley Act of 2002 Article Review

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Sarbanes-Oxley Act of 2002 Article Review

LAW/421
October 8, 2012
Thomas Glenz

Sarbanes-Oxley Act of 2002 Article Review
The Sarbanes-Oxley Act was a daring attempt to legislate morality with the intentions of restoring integrity with the public in financial markets. The Sarbanes-Oxley Act is a direct result from corporate scandals like WorldCom, Enron, Adelphia, and Tyco, which succeeded in the collapse of these major corporation and ruined people’s lives. The mistreatment of employees and investors by flagrantly unethical business practices cost some their life savings and retirement portfolios while others went to jail because they were part of the scandals. The provision regarding ethics in business contained within the Sarbanes-Oxley Act help to ensure and deter unethical business practices. There are two particular provisions that have a big effect on organizations on their ethical decision making. The first is the requirement corporations must create a code of ethics for senior financial officers that include enforcement mechanisms and the regular rotation of outside auditors. There are other requirements such as Section 303 “improper influence on conduct of audits,” Section 306 “insider trades during pension fund blackout periods,” and Section 307 which state “rules of responsibility for attorneys,” (Orin, 2008) but the first two mentions have the power collectively to regulate corporations internally and externally. The Code of Ethics is a schematic for each corporation for governance within the organization to regulate and set acceptable standards for directors, officers, accountants, and employees. The mandatory rotation of auditors ensures the organization has a truly independent audit that allows auditors to question and criticize business practices of the corporation experiencing the audit. The SOX should have went one step farther by mandating audit –firm rotation rather than just rotation of the lead person doing the audit,...
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