"Compliance" Please respond

Computer Science
Tutor: None Selected Time limit: 1 Day

  • Examine the Sarbanes–Oxley Act (SOX). In your opinion, determine whether SOX has been able to achieve what it was intended to do and if it has reduced the unethical business practices that led to its enactment. Provide two examples to support your reasoning.
Aug 2nd, 2015

Thank you for the opportunity to help you with your question! the solution is as such:

Sarbanes—Oxley Act (SOX) has not been able to achieve what it was intended to do in reducing the unethical business practices that led to its enactment. Short-term market greed; cultural features and pressures (driven by excessive executive compensation) continue to influence many executives to commit fraud. Fundamentally, fmancial reporting fraud stems from management and a lack of ethical conduct, which SOX cannot correct. As a result, fraud is not so much due to inadequate controls as it is to executives who override controls when pressured to show earnings, those are forces that are not amenable to regulation. For example, Beam Stearns invested in the sub-prime mortgage market from 2003 after the US government had begun to deregulate derivative trading. The business collapsed as more people started to be unable to meet mortgage obligations. SOX require audit committees to establish procedures for receiving whistle blower complaints regarding auditing, accounting, and internal control irregularities. Also, SOX is to provide for the confidential and anonymous treatment of employee concerns with respect to such matters. However, internal auditors and other employees have been known to suffer career damage for bringing fraud to file the surface, especially fraud by top performers and executives. Because the problems that led to SOX related directly to shortcomings in the areas of courage, competence, and integrity cannot be legislated. For this reason, SOX might not be able to achieve its intended results successfully or eliminate threats to whistleblowers. The following numbers suggest that SOX and the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act are not effective (McMillian, 2012):
• In 2009, only 4% of whistle-blowers experienced physical attacks on their
property, versus an increase of 31% in 2011.
• Despite, over the past five years, whistle-blowing has only risen by 12%,
retaliation has risen by 83%. Such an increase could drive down future
reporting rates.
• In 2011, for the first time in the history of the National Business Ethics
Survey, managers are not more likely to experience retaliation than nonmanagement
employees. The biggest jump in retaliation of all employee levels
occurred among senior management.

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Aug 2nd, 2015

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