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Ethics and Compliance
This paper will access analyze data from Wal-Mart’s annual financial reports as well as Security and Exchange (SEC) filings for the past two years. This analysis will be used to evaluate the organization’s financial performance during the past two years using financial ratios. An assessment of the role of ethics, compliance and procedures currently in place to ensure organizational ethical behavior will also be addressed. An explanation of how financial markets operate within the United States will be discussed along with processes adopted by Wal-Mart which ensure SEC compliance.
Role of Ethics and Compliance in Wal-Mart’s Financial Environment
As the world’s largest retailer, Wal-Mart has openly accepted a global responsibility of captivating ethical sourcing far beyond that of workplace compliance. As of today, the company possesses more than 10,700 business locations spread across 27 separate countries. Coupled initiatives such as diversity and inclusion, hunger and nutrition, women’s economic empowerment, environmental sustainability, and ethical standards and resources are directly aligned with the company’s “Every Day Low Cost” approach (Wal-Mart, 2012). This organization’s ethics and compliance roles have enabled the organization to reach far beyond store barriers proceeding to global financial wealth. Additionally ethical compliance protects the company from potential financial loss, corporate crimes, negative imaging, and forfeiture of comparative advantage. The company must abide by standards created which not only protect the company from financial wrong doing but also protects investors. Protection from such occurrences is regulated through the execution of the Sarbanes-Oxley (SOX) Act. Although the SOX was introduced as a result of corporate scandal, key stakeholders now have access to critical financial data not previously easily accessible (Sarbanes-Oxley Essential Information, 2013).
Procedures to Ensure Ethical Behavior Wal-Mart open stock to the public as early as 1970 and first traded on the New York Stock Exchange in 1972. Since its first declaration of a single dividend in 1974, Wal-Mart has paid an annual cash dividend to shareholders (Wal-Mart, 2012). Procedures in place to ensure ethical behavior can be found within the company’s myriad of governance tools, public documents, and board director’s committee charters. Corporate governance guidelines identify qualifications of directors and the selection process. The governance addresses separation duties in regards to auditors and directors. Even though statement codes of ethics are common place in just about any organization, Wal-Mart holds senior officers to a more stringent code of ethics; as a testament to the company’s pursuit of compliance, senior Financial Officers must adhere to an additional set of ethics which further re-state expectations and requirements.
These governances are living documents within the corporation and have been modified in the recent past to ensure continued up-to-date compliance. The Investment Communication policy details ethics which foster communications among the company, officers, associates, broker-dealers, and investment professionals. The purpose of this policy is to ensure the company’s constant compliance with laws as well as proper distribution of information regarding the company’s financial market health.
Financial Markets
According to the text financial markets facilitate the movement of money from savers, who tend to be the individuals, to borrowers, who tend to be the businesses (Titman, 2011). In return for the use of the savers’ money, borrowers provide the savers with a return on their investment (Titman, 2011). There are many different types of financial markets such as: insurance companies, commercial banks, finance companies, investment banks and investment companies (Titman, 2011). Each type of market will have different types of maturities of the securities that are traded within them. Some markets will have short term debt maturities while others will have long term maturities (Titman, 2011).
How Do They Work As mentioned above there are different types of financial markets. To get a better understanding how their functions an overview will be listed below:
1. Insurance Companies: collect premiums from their insurers. These premiums are then put into a reserve until there is a loss. The reserve is this used to pay out the claim to the insured party. The revolving reserve is also used to finance loans to companies or individuals (Titman, 2011).
2. Commercial Banks: Like insurance companies, banks collect savings of its members and used the savings for different investment options such as loans. The money that is earned through lending is via the interest rates.
3. Investment Banks: Provide financial consulting services to other companies and governments when merging activity occurs. Additionally they help these entities raise money for future growth and development
4. Investment Companies: Another financial institution that pools the savings of individual savers and invests money in various securities such as: mutual funds, exchange-traded funds, or hedge funds.
SEC Compliance The Securities Act of 1933 and the Securities Exchange Act of 1934 were created by Congress to restore investor confidence in the capital market by providing investors with more reliable information (SEC, 2012). Wal-Mart Inc. adheres to the basic principles of the SEC by providing easy access to their annual reports, quarterly results, non-gaap measures, comparable store sales and various SEC filings (Wal-Mart, 2012). As an investor or a potential investor one can easily go to the Wal-Mart website and gain access to this information to make a better informed decision about investing activity. Additionally, the consolidated financial statements that are reported and displayed on the company website are audited by an independent auditing firm; Ernest and Young, LLP (Wal-Mart, 2012). By having the independent auditing firm Wal-Mart is in compliance with not only the SEC, but the Sarbanes-Oxley Act, and the Public Accounting Oversight Board for the United States (Wal-Mart, 2012).

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