Ethical Behavior at the Workplace

The Sarbanes-Oxley Act of 2002 was implemented and designed to “protect the interests of the investing public” and the “mission is to set and enforce practice standards for a new class of firms registered to audit publicly held companies” (Verschoor, 2012). During the early 2000 's, the world saw an alarming number of accounting scandals take place resulting in many corporations going bankrupt. Some of the major companies involved in these scandals were from Enron, WorldCom, and one of the top five accounting and auditing firms, Arthur Andersen. These companies were dishonest with their financial statements, assuring the public the company was very successful, when in reality they were not. This became a problem because if the public believes a company is doing well, they are more likely to invest in it. That is to say, once these companies were exposed, it caused a number of companies going bankrupt and a major mistrust between the public and the capital market. Consequently, the federal government quickly took action and enacted the Sarbanes-Oxley act of 2002, also known as SOX, which was created by the Public Company Accounting Oversight Board (PCAOB), and the Securities and Exchange Commission (SEC). Many have questioned what Norman Bowie (2004) had questioned,

c. How public accounting firms are unable to handle increased auditing and accounting demands by public companies.

Passed in the wake of last year's corporate accounting scandals, the Sarbanes-Oxley Act requires public companies to disclose more financial information than in the past, and it holds corporate directors and officers more accountable for the accuracy of disclosures than ever before. Sarbanes-Oxley also requires companies' top officers to assess and certify the effectiveness of the internal controls they use for financial reporting.

Sarbanes-Oxley Act was a game changer for corporations all across the United States. Prior to Sarbanes-Oxley Act, big name companies such as Enron, Kmart and Tyco were more inclined to have fraudulent activities happen internally. Having all these issues arise during the last decades, Congress was anxious to act and create Sarbanes-Oxley Act with the intentions to protect investors and have strict reforms to deter internal financial frauds from occurring again. Although, this reform has had a great amount of success in achieving its goals, it also has some holes that were not well though out, when it comes to the entirety of it. The main problem with Sarbanes-Oxley is the cost it has on smaller companies, which shifted the power from the investors and into the auditors. (Prince, 2005)

In the wake of the major financial scandals, that occurred in 2001 and 2002 the United States Congress passed the Sarbanes Oxley Act (SOX) of 2002. These financial scandals adversely affected the public’s trust in the stock market, therefore passing the SOX helped investors to regain trust in investing in the stock market. Prior to the SOX being passed “neither management or auditors of publicly traded companies were required to evaluate, audit, or publicly report on the effectiveness of internal controls over financial reporting” (Kinney & Shepardson,

At first, the Sarbanes-Oxley Act is the U.S. law about to protect investors from the possibility of deceptive accounting activity by a corporation and improving fraudulent a financial report. The act commands strict reforms to improve financial disclosures from corporations and prevent accounting fraud. The act requires to companies because it increases the credibility of the companies’ financial statements from investors. The act defined to restore investor’s confidence in the financial market and close loopholes that allowed a company to defraud investors. Moreover, the act is a requirement that public companies for the strength audit committees, a test that to perform internal control, making directors and officers personally liable for

Following these series of failures, SOX was enacted to restore investor’s confidence which was rattled and to prevent accounting frauds in the future with improved corporate governance and accountability which all public companies must comply. SOX was named after Senator Paul Sarbanes and Representative Michael G. Oxley, who were the main drafters of the Act. It was approved by the House of Representatives and signed into law by the President George W. Bush on July 30, 2003. Lack of ethics and integrity seem to be the key factors that caused accounting fraud. SOX revised the framework for the public accounting and auditing profession, provided guidance for better corporate governance and created regulations to define how public companies are to comply with the law. Although many have questioned whether SOX is actually effective to prevent frauds like Enron and WorldCom in future, it is considered to be the most extensive legislation related to publicly- traded companies and external independent auditors since the 1930s. President Bush called it “the most far reaching reforms of American Business Practices since the time of Franklin Roosevelt” (BUMILLER, 2002). The purpose of this paper is to determine whether or not Sarbanes Oxley’s regulations will be effective in preventing another financial statement fraud like Enron and WorldCom.

The Enron scandal was one of the most notorious bankruptcies of all time. Many people know about the energy titan’s downfall but less realize that it was also one of the biggest auditing blunders in American corporate history, leading to the dissolution of the Arthur Andersen LLP, which at the time was one of the five largest auditing and accountancy partnerships in the world. The most intriguing aspect of this case is that Andersen was eventually cleared by the United States Supreme Court, yet the company still failed to live on due to its tarnished reputation stemming from its unethical behaviors. The pressure to generate revenue for clients while simultaneously auditing their books became too large a burden for the firm and they eventually resorted to unethical means to achieve their objectives. The demise of the Andersen accounting firm shows the true importance of practicing good ethics and maintaining a good reputation amongst peers; the vitality of the business could depend on sustaining a clean image in the ever-changing business world.

The Sarbanes-Oxley Act (SOX) was enacted in July 30, 2002, by Congress to protect shareholders and the general public from fraudulent corporate practices and accounting errors and to maintain auditor independence.   In protecting the shareholders and the general public the SOX Act is intended to improve the transparency of the financial reporting.   Financial reports are to be certified by the Chief Executive Officer (CEO) and Chief Financial Officer (CFO) creating increased responsibility and independence with auditing by independent audit firms. In discussing the SOX Act, we will focus on how this act affects the CEOs; CFOs; outside independent audit firms; the advantages and a

This act was primarily in response to a series of U.S. corporate failures that resulted in an enormous loss of public investment funds. Hence, the U.S. government - Securities Exchange Commission (SEC) in an effort reduce fraud and conflicts of interest, sought to legislatively demand corporate responsibility and accountability from corporate executives to all stakeholders in order to increase financial transparency and re-establish investor confidence. The legislation is intended to address some of the questionable accounting practices that underpinned the recent spate of corporate scandals thereby reducing fraud and failures in corporate reporting. The act’s legislative requirements directly affect auditor firms, boards of directors, corporate executives, and Wall Street analysts – their make up, relationships and

In much of the business world from the past to today, we constantly are exposed to unethical behaviors and situations of conflict within the work environment. Thinking critically about a particular dilemma and whether or not it is ethically wrong takes time and critical thinking. The accountants of Enron could have avoided this situation by stepping in and explaining to their superiors the cost of the long-term consequences compared to the short-term benefits was not worth what they were putting out on the line. By analyzing the Enron scandal there will be a greater ability to know information that will help pin point any unethical behavior that an accountants may experience in their own work life. Justin Schultz, a corporate psychologist

Regardless of your occupation, employees have the right to privacy. Case 9.1: Unprofessional Conduct shows how Pettit privacy was violated. Pettit was a teacher of many years and never had a bad evaluation of her work. What she did outside of work was labeled unprofessional by the Board of Education and they chose to fire her because they believed she was unfit to teach. I disagree with them completely and they did violate her privacy.

Personal values may conflict with ethical decision making if those personal values are different than the organizational norms of the business or institution. Constructing, and maintaining personal ethics in the workplace rests with the individual, and how willing he or she is in assimilating to the evolving cultural dynamic of the corporate world. Many times a person find their personal, cultural and/or organizational ethics conflicting and must reconcile a course of action that will mitigate cognitive dissonance. In order to be a productive member of society, in small groups and globally, one must reconcile these conflicts on a daily basis and continually move forward while maintaining personal integrity and

I believe in the given situation that the most obvious solution is to publish it with both names, the fired colleague and myself, because being fired from a job for being honest and respectful to coworkers reflects well on you, and poorly on your boss. If, however, he does decide to fire you, it would be easy to explain to future employers the cause of your termination, and would hopefully to other companies, to prove you are a respectful and honest employee. The ethics codes that support this claim are as follows: I. Fundamental Canons: sub 3., 4., 5., 6.; II. Rules of Practice: e., f.; and III. Professional Obligations 1, 2, 4, 5.. "Issue public statements only in an objective and truthful manner, Act for each employer or client as faithful

Ethics is the term we give to our concern for good behavior. Its human nature to not only is concerned with our own personal well being, but also that of others and of human society as a whole. Basically, treat others how you would like to be treated. Business ethics is very similar to normal every day ethics. It is related in a way that it involves being fully aware of what we're doing including the complications and consequences of our actions. Being aware of ethics in business requires us to be aware of two things. First, we have to have a need with complying with rules, such as laws, customs and expectations of the community, the principles of morality and the policies of the organization