Organizations that emphasize social responsibility and adhere to a set or corporate ethics will likely gain...

Organizations that emphasize social responsibility and adhere to a set or corporate ethics will likely gain competitive advantages in the market place and avoid costly litigation and loss of reputation. Due to high levels of corporate fraud in the 1990s with companies such as Enron and Global Crossing, Congress passed the Sarbanes Oxley Act of 2002 that set new increased standards for the boards of public U.S. companies and accounting firms. Read the different sections and provisions of the Sarbanes Oxley Act at the following link. http://www.soxlaw.com/ Discuss your overall thoughts on the Sarbanes Oxley Act and the provision that you feel is the most effective and why. Additionally do you believe that executives will become more ethical based on the legislation? Why or why not?

Expert Solution

The Sarbanes Oxley act introduced to force all companies and accounting firms to produce a transparency in their financial reporting structure.The act consisted of 11 sections out of which some important sections are described briefly below.

The most important section is section 302 which clearly instructs the firms that it is a statutory requirement for every company to produce a clear and transparent financial report periodically which should be certified by proper authority.The certifying officer is responsible for any future anomaly which could be found in the future.This report should also contain any changes in internal control procedures.This act alone defines a very strong reason to follow certain rules for the companies to have ethical financial reporting structure.

Yes with these acts the executives will be more ethical as the laws instruct the companies to have a statutory requirement that every financial report be certified by company authority and the certifying person will be having sole responsibility for any future discrepancy.This law also says in section 802 that penalties and jail term will be imposed for any misconduct in reporting or any unethical behavior in financial reports. This also will force employees to become ethical.

keosha answered 8 months ago

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