Sarbanes-Oxley Act of 2002

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Sarbanes-Oxley Act of 2002

Objectives:

Write a paper that describes the main aspects of the regulatory environment which will protect the public from fraud within corporations, Pay particular attention to SOX requirements.

Required Elements:

• No more than 1400 words
• Specifically evaluate whether SOX will be effective in avoiding future frauds.
• Format consistent with APA guidelines

For this assignment, you will need to do some research on the Internet and cite some sources that believe SOX has or has not been effective.  You should discuss at least three views for each position.  At the end of the paper, state your own opinion about whether SOX has been effective or not.

Do not summarize the Act.  I will post two different summaries of the Act for your review.  They are:

• United States regulators and lawmakers were very concerned that the economy would suffer if investors lost confidence in corporate accounting because of unethical financial reporting.  In 2002, Congress passed the Sarbanes-Oxley Act (SOX) to reduce unethical corporate behavior and decrease the likelihood of future corporate scandals.  As a result of SOX, top management must now certify the accuracy of financial information. In addition, penalties for fraudulent financial activity are much more severe. Also, SOX increased the independence of the outside auditors who review the accuracy of corporate financial statements, and increased the oversight role of boards of directors.
• Effective financial reporting depends on sound ethical behavior.  To sensitize you to ethical situations and to give you practice at solving ethical dilemmas, we address ethics in a number of ways in this book: (1) A number of the Feature Stories and other parts of the text discuss the central importance of ethical behavior to financial reporting. (2) Insight boxes with an ethics perspective highlight ethics situations and issues in actual business settings. (3) At the end of the chapter, an Ethics Case simulates a business situation and asks you to put yourself in the position of a decision maker in that case.

When analyzing these various ethics cases and your own ethical experiences, you should apply the three steps outlined in Illustration below:

Solving an Ethical Dilemma

1. Recognize an ethical situation and the ethical issues involved.

Use your personal ethics to identify ethical situations and issues. Some businesses and professional organizations provide written codes of ethics for guidance in some business situations.

2. Identify and analyze the principal elements in the situation.

Identify the stakeholders—persons or groups who may be harmed or benefited.  Ask the question: What are the responsibilities and obligations of the parties involved?

3. Identify the alternatives, and weigh the impact of each alternative on various stakeholders.

Select the most ethical alternative, considering all the consequences. Sometimes there will be one right answer. Other situations involve more than one right solution; these situations require you to evaluate each alternative and select the best one.