“Ethical Governance: SOX & FCPA”

In this paper we will attempt to define the importance of a the, Sarbanes-Oxley and Foreign Corrupt Practices Act. The Foreign Corrupt Practices Act is a United States federal law known primarily for two purposes, one that addresses accounting transparency requirements under the Securities Exchange Act of 1934 and another concerning bribery and government officials.

The primary purpose of the Foreign Corrupt Practices Act (FCPA) was to prevent the bribery of foreign officials in order to obtain business. “official statistics show that 400 American firms have collectively paid $300 million in bribes and other questionable payments to foreign governments, political parties and also directly to the accounts of government officials” ("Fcpa"). Unfortunately, the improvement in internal control systems was not enough to prevent added problems.

In the late 1990s and early 2000s the media was full of news of accounting frauds and problems at companies such as Enron, Xerox, WorldCom, Global Crossing, and others. While Enron made $62 billion in assets, declared bankruptcy (Romney, Steinbart 201-202). In response to these problems, Congress passed the Sarbanes-Oxley Act of 2002 (SOX). SOX was intended to prevent financial statement fraud, make financial reports transparent, protect investors, and punish executives who perpetrate fraud
(Romney, Steinbart). Many people believe that SOX is the most important and influential business-oriented legislation in the last 70 years (Romney, Steinbart 201-202). Some of the most important aspects of SOX are; Pubic company accounting oversight board to control the auditing profession, new rules for auditors such as reporting specific information to the company’s audit committee, new roles for audit committees- audit committee members must be on the company’s board of directors and be