Government Oversight and Corporate Ethics Essay

2009 Words 9 Pages
Ethical corporate behavior has been a recurring issue of public policy. Recent events have brought this issue into sharp focus beginning with the Enron scandal in 2001 and more recently the financial crisis of 2008. Subsequent regulation such as the Sarbanes-Oxley act seem to be in reaction to the public clamoring for government action in the wake of painful economic outcomes. A deeper examination of the events leading up to Enron and the financial crisis both seem to indicate that government agencies were asleep at the switch. Policy such as Sarbanes-Oxley in the wake of Enron have not prevented the more recent financial crisis of 2008. Government social policy has not promoted corporate ethical responsibility but rather mandated poor …show more content…
It is the duty of government to ensure each corporation is fulfilling it’s obligations to shareholders, stakeholders and the public.
The Sarbanes-Oxley act of 2002 was passed in reaction to public pressure following the collapse of Enron Corporation which cost investors around $60 billion dollars when it collapsed in 2001 and similar financial scandals at Worldcom, Tyco, and Global Crossing (Hart, 2009). The Sarbanes-Oxley act is composed of six key provisions relating to corporate accountability of publicly traded companies. Under sections 302 and 906, the chief financial officer and chief executive officer must certify filings with the Securities and Exchange Commission such as quarterly audits (Cross & Miller, 2012). There are criminal penalties imposed if executives knowingly sign off on misleading financial statements (Hart, 2009). Under section 404 all public companies with a public float of more than $75 million are required to have internal controls over financial accounting and independent auditors to report on those controls. Publicly traded companies are prohibited from making personal loans to directors and officers of the company under section 402. Whistleblowers, employees who report securities violations by their employer are provided protection under section 806 from being fired or discriminated against by their employer in the future. Section 804 limits private

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