The Sarbanes-Oxley Act Case Study

1725 Words 7 Pages
Assignment 7

Introduction

The lack of effective character qualities and business ethics training has resulted in a variety of corporate scandals. It is important for a leader to have a solid character foundation in order, to enhance their chance of long-term success (Beebe, 2012). Overall, an individual 's beliefs, self-reflections, actions, and corrective behaviors form their character (Beebe, 2012). Oftentimes, an individual 's lack of integrity and greed will lead to corrupt political practices, indiscretions, or money embezzlements, which undermines the confidence level in a leader (Beebe, 2012). As a result, corporate scandals happen such as the multi-billion dollar Enron scandal, which also demolished their accounting firm (Martin
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The Sarbanes-Oxley Act was implemented in order, to improve ethical business practices and corporate governance (Mingers & Walsham, 2010). In other words, the Sarbanes-Oxley Act was implemented to strengthen financial control and increase accountability (Mingers & Walsham, 2010). The Sarbanes-Oxley Act was "the most sweeping federal legislation concerning corporate governance since the Securities Act of 1933 and the Securities Exchange Act of 1934" (Willits & Nicholls, 2014, p. 38). The key objectives of the Sarbanes-Oxley Act was to enhance auditor independence, create the Public Company Accounting Oversight Board (PCAOB) to set auditing standards and police the accounting profession (Sweeney, 2012), and to improve corporate governance, which will reduce or eliminate fraud (Willits & Nicholls, 2014). Overall, the Sarbanes-Oxley Act is to increase the level of difficulty for organizations, especially large public companies to commit fraudulent and/or deceitful acts (Sweeney, 2012). In addition, under section 404 of the Sarbanes-Oxley Act companies are required to establish procedures for financial reporting and internal controls (Sweeney, 2012). As a result, the Sarbanes-Oxley Act "created a total revision of the regulatory framework for the public accounting and auditing profession and provided guidance for strengthened corporate …show more content…
Overall, the Sarbanes-Oxley Act has been credited for strengthening at least two investor areas, which include the CFO and CEO responsibility and accountability for the organizations finances and the increase in professionalism among the corporate auditor committees (Verschoor, 2012). There have been many changes to the public corporations financial reporting and the mandating of public codes of ethics. Overall, the Sarbanes-Oxley Act has intended to restore the integrity into the corporate world. There are areas for improvements and many critics of the Sarbanes-Oxley Act, there may still be plenty of fraud but if the Act was not implemented the fraudulent acts, and misstatements would be worse (Sweeney, 2012). It is important that effective leaders are the ones employed in the executive level positions and any wrongdoers are held accountable for their actions to the fullest

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