Corporate Governance and Financial Decision Making

Topics: Enron, Corporate governance, Auditing Pages: 2 (503 words) Published: April 1, 2013
Sarbanes-Oxley Act Article

Sarbanes-Oxley Act Article
The article chosen is the Sarbanes-Oxley Act of 2002 and the legacy of Enron. This act was passed after corporate scandals that involved the regulatory mismanagement and fraud of Enron. This article review will cover topics on how the Sarbanes-Oxley and the collapse of Enron in which affected the ethical decision-making processes in business environments and criminal penalties for which the act provides.

Decision-Making in Business Environment
“A new generation of corporate leaders has entered the boardroom since Enron’s bankruptcy in December 2001” (Peregrine, 2011, Para. 2). The Act of Sarbanes-Oxley was passed to restore the integrity and to renew consumer confidence in the financial markets. The Sarbanes-Oxley regulates three areas: financial reporting, auditing, and corporate governance. The Sarbanes-Oxley requires businesses and corporations to develop and implement a code of ethics, collaboration, and confidentiality. The significance of this law is to viewed context that affect corporate governance and the exercise duties of officers and directors. Decision-making provides standards and guidelines to those employees of all levels. “This new law impacted accounting and financial decision making because it required companies to be responsible for their financial decisions; it also regulated the way board members and auditors interact, as well as, recognizing and regulating the problem of auditors working for companies that they have personal interest in” (Ganly, 2011, Para. 3). Sarbanes-Oxley affects smaller companies and makes sure the organization is under compliance. Management of such company has the legal duty to maintain a system of auditing to ensure financial statements are reliable. A different element of this Act requires annual reports that include the company’s assessments of the financial data reporting.

Criminal Penalties
“The other governance themes of...

References: Ganly, S. (2011). Ethics in Accounting, Financial Decision-Making, and the Sarbanes-Oxley
Act. Retrieved January 23, 2013.
Peregrine, M. W. (2011). Another View: Sarbanes-Oxley and the legacy of Enron. Retrieved
January 23, 2013.
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