In 2002, the US passed the Sarbanes ¡V Oxley Law. This law was enacted to strengthen Corporate governance and to restore lost faith by the investors, and to protect investors by improving the accuracy and reliability of corporate disclosures. U.S. Senator, Paul Sarbanes and Michael Oxley were the sponsors of said law. It was signed into law on July 30, 2002 by George W. Bush after both houses of Congress voted on it without changes 423 to 3 in the House and in the Senate 99 to 0 for an overwhelming approval (Six Sigma).
The law came to be due to accounting scandals that occurred in a number of prominent companies in the United States. Those companies were Enron, Tyco International and World Com (MCI). World Com revealed that it had overstated it earnings by more than 3.8 billion for the past five quarters in June 25, 2002. They were able to do this by improperly accounting for its operating costs (Sarbanes ¡V Oxley Act). Due to these scandals the public trust was damaged and questions were raised as to practices in the accounting a reporting of these companies (Sarbanes ¡V Oxley Act). The Sarbanes ¡V Oxley Law involves a wide area of involvement and covers new and or enhanced standards applicable to all U.S. public companies boards, Management and public accounting firms (Six Sigma).
The SOX Law requires the SEC (Securities Exchange Commission) to implement new rulings in order to comply with the new law. This law is covered in 11 titles, and covers Corporate Board responsibilities as well as the criminal penalties if there is failure to comply (Six Sigma). Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley)
Public Company Accounting Oversight Board
Enhanced Financial Disclosures
Analyst Conflicts Of Interest
Commission Resources And Authority
Studies And Reports
Corporate And Criminal Fraud Accountability
White-Collar Crime Penalty Enhancements
Corporate Tax Returns
Corporate Fraud And Accountability
In summary the Sarbanes ¡V Oxley Law encompasses the following: «
¡§Establishes new standards for Corporate Boards and Audit Companies «
Establishes new accountability standards and criminal penalties for Corporate Management «
Establishes new independence standards for External Auditors «
Establishes a Public Company Accountability Oversight Board (PCAOB) under the Security and Exchange Commission (SEC) to oversee public accounting firms and issue accounting standards.¡¨ (Six Sigma)
In the Harris Interactive poll in the Wall Street Journal, 55% of U.S.¡¨ investors believe that financial and accounting regulation governing publicly held companies and too lenient¡¨, this being 3 years after enactment of the law. Only one-quarter of investors feel the law has made the communication of financial information much ¡§more¡¨ or ¡§somewhat more transparent¡¨, with 11% believe that it is less transparent (Sarbanes ¡V Oxley Act).
Ethics apply not only to business and economic policy, but all aspects of human behavior. They tell us how we should act in certain situations and often it incorporates laws to govern this behavior. Ethics are not the same as feelings although they often play into decisions that are made. Some are better at this than others and often decisions must be made that feel good but are fundamentally wrong. Our feelings can make us feel uncomfortable while doing the right thing as well. Ethics is not a religion as not all are religious. However, ethics do apply to everyone in some form or the other. Religion as good as it may be does not address all problems and or issues. Even though laws are a good system, it does not always follow ethical standards. Law can deviate from what is ethical due to power struggles of narrow groups. Law can also be slow to...
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