...Sarbanes-Oxley act and the Dodd-Frank act have attempted to reinforce and uphold the single most important virtue that our capitalist society so desperately depends on, trust. Many of the following names are familiar to us all by now, and for the wrong reasons: Enron, Lehman Brothers, World-Com, and Tyco. So what have SOX and DOD actually accomplished for our capitalist society? What can they actually do to help avert such catastrophic situations in the future? Let us begin with the Sarbanes-Oxley Act. Under the watchful eye of the Securities Exchange Commission the Sarbanes-Oxley act strives to protect the investing public from fraudulent and erroneous accounting practices, in addition to improving the accuracy of public financial statements. The act has transformed the world of accounting by: creating the PCAOB (Title I), increasing an auditor’s independence (Title II), increasing the responsibility/liability of a company’s senior management (Title III), enhanced financial statement disclosure requirements (Title IV), eliminating analyst conflicts of interest (Section V), increasing corporate and criminal fraud accountability (Section VIII), enhancing white–collar crime penalties (Title IX), increasing the responsibility/liability for corporate tax returns (Title X), and increasing the responsibility for corporate fraud and accountability (Title XI). There are several more provisions that comprise the act, but those mentioned are the “heavy hitters” of SOX. The PCAOB’s...
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...Nation. As differentiated from rewards, which offer payment for accomplishment of a specific act such as providing information that leads to the capture of a particular criminal, bounties are tailored to encourage the services or actions by some class of persons in pursuance of a governmental purpose. One of the earliest examples in the United States is the grant of bounty land grants during both the Revolutionary War and Civil War. For the purpose of encouraging longer military service, this bounty system would offer land to men fit for service in return for some specified number of years of military service. Although arguably not a major factor in the United State victory in both wars, this bounty system accomplished its purpose as evidenced by the United States enticing enough men into ranks of military service to further its war campaign. Today, a common use of bounties is as an incentive for a class of persons, commonly referred to as whistleblowers, with knowledge of misconduct on the part of private or public organization to report that misconduct which is in violation of the law or against the public interest. The government encourages whistleblowing through the use of bounties and anti-retaliation laws that make up a scheme for whistleblower protection. Whistleblowers face many obstacles that discourage their reporting of such misconduct, including being fired from their job and the stigma associated with being a “snitch” which may ruin their opportunities of finding...
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...expose corruption or to expose any kind of danger to the public or the environment. Whistle-blowing can be internal or external. The whistle blowers are often well educated people holding professional positions and are altruistically motivated. They allow themselves to be guided by their own attitudes and hold utilitarian beliefs. However, in case of being found out, the effects can be vastly debilitating for them including losing the job, isolation and personal life being put in jeopardy. The Dodd Frank law provides the whistle blowers protection from retaliation from the companies. If companies retaliate to whistle blowing the employees reporting wrong doing are protected by the Dodd Frank's anti retaliation statute and liable for double back pay (Miceli, et. al. 1984). Introduction Recently, a case of whistle blowing had come to light in September last year when Khaled Asadi filed a complaint that G.E. Energy (USA) violated the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. He alleged that he had been terminated after making an internal report of a possible securities law violation. Asadi had accepted GE energy's offer in 2006 to be its s its Iraq Country Executive and relocated to Amman, Jordan. While serving in this position, Asadi came to know that GE Energy had hired a woman closely associated with a senior Iraqi official to win his favor for negotiating a lucrative joint venture...
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...Disparate Impact of SOX on Large and Small Firms Andrew Rubin St. John’s University I. Introduction During the early 2000’s there was a series of scandals involving many large, multinational firms. Among these firms were Enron, Tyco and WorldCom, all of whom had been costing investors and stakeholders millions, if not billions, of dollars through fraud. Following the scandal, the downturn in investor confidence was enormous. Looking back, there appeared to be a culture of fraud and deceit inside corporate America that had been hurting the average investor. After uncovering these scandals Congress wanted to take immediate action. It passed the Sarbanes – Oxley Act (SOX) shortly after in an attempt restore faith in the country’s capital markets. Between 2000 and 2002 there appeared to be a new, large fraud every few months being covered in the news. Investors were drawing their money out of the markets and some of the largest corporations in America were going bankrupt. Congress quickly looked for answers as to how this could happen and discovered a myriad of factors. Many factors combined to create a culture where small changes to the financials were overlooked and over time those small changes accumulated into larger changes, and bigger issues. Eventually the once small changes became too large to ignore any longer and resulted in collapse. One major factor uncovered by Congress was the effect of auditor conflicts of interest might be having...
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...TERM PAPER: Fraud Prevention: Are Existing Deterrents Working Kevin B. Hoover ACC 630 – Professor Sheila Vagle University of Maryland University College Introduction I recently read the following quote posted by an anonymous person on Facebook: “I had ADHD when I was a kid too, but when I saw my father taking off his belt, I was healed”. I share that not just because it is true in my case, but because it is a fairly humorous and spot on example of a deterrent. Deterrence is a critical element of the effort to prevent a particular behavior. People have to have a reason not to act that way. When I was a kid, I didn’t know what a deterrent was, but I sure knew that the possibility of a whipping was reason enough not to lose my mind. What deters people working in the business and financial worlds from committing fraud? The Sarbanes-Oxley Act of 2002 perhaps? Fear of prosecution? One would hope so, but it is certain that the answer is more complex than that. In fact, it could be argued that the answer is nothing deters people from committing fraud because fraud is still happening. Therein, lies the aim of this paper. This paper will take a look at financial fraud and the deterrents in place since 2002, and offer the opinion that the deterrents are not working. A history of the issues as they relate to this opinion will be given. Further, recommended solutions to the perceived problems will be put forth. It is worthy of mention that deterrence and prevention...
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...to their immediate supervisor, union representative, or human resources department) or external means (i.e., going outside their organization to, for example, a third party ombudsman, an external hotline, or an applicable government regulatory agency related to the type of wrongdoing behavior. Internal whistleblowing mechanisms for public companies must comply with the provisions of the Sarbanes-Oxley Act of 2002 (SOX). Two of the many corporate governance provisions of SOX place whistleblower-friendly requirements on issuers. SOX section 301 requires the audit committee of every issuer to establish procedures for the receipt, retention, and treatment of complaints regarding accounting, internal control, or auditing matters, and to maintain the anonymity of employee complaints regarding accounting and auditing matters (i.e., the establishment of a whistleblower hotline). SOX section 806 provides protection for employees who blow the whistle against their employer, an anti-retaliation provision subsequently reinforced by the Dodd-Frank Wall Street Reform and Consumer Protection Act. Programs to encourage external whistleblowing typically provide an incentive to the would be whistleblower, either in the form of monetary awards, protection from retaliation, or both. Researchers have identified various issues that are most...
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...Assignment 1: Whistleblowing and Sarbanes-Oxley LEG500030VA016-11 (Law, Ethics & Corporate Governance Professor Timothy Griffin Strayer University Jan Jones July 19, 2015 Describe the key characteristics of a whistleblower, and briefly summarize one (1) researched instance of whistleblowing in one (1) publicly traded company within the last 12 months. Include the details of the issue that the whistleblower reported and the effect of the whistleblower’s actions on both the whistleblower himself and the company. A whistleblower is a person who exposes any kind of information or activity that is deemed illegal, dishonest, or not correct within an organization that is either private or public. The information of alleged wrongdoing can be classified in many ways: violation of company policy/rules, law, regulation, or threat to public interest/national security, as well as fraud, and corruption. Those that become whistleblowers can choose to bring information or allegations to surface either internally or externally. Internally, a whistleblower can bring his/her accusations to the attention of other people within the accused organization. Externally, a whistleblower can bring allegations to light by contacting a third party outside of an accused organization. He or she can reach out to the media, government, law enforcement, or those who are concerned. Whistleblowers also face stiff reprisal/retaliation from those who are accused or alleged of wrongdoing. One whistleblower-related...
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...LAWSON AND JONATHAN M. ZANG, v. FMR LLC, ET AL., _______________ Respondents. Petitioners, IN THE On Writ Of Certiorari To The United States Court Of Appeals For The First Circuit _______________ BRIEF FOR RESPONDENTS _______________ STEPHEN M. SHAPIRO TIMOTHY S. BISHOP MAYER BROWN LLP 71 South Wacker Drive Chicago, IL 60606 (312) 706-8684 MARK A. PERRY Counsel of Record PORTER N. WILKINSON GEOFFREY C. WEIEN GIBSON, DUNN & CRUTCHER LLP 1050 Connecticut Avenue, N.W. Washington, D.C. 20036 (202) 955-8500 mperry@gibsondunn.com RACHEL S. BRASS GIBSON, DUNN & CRUTCHER LLP 555 Mission Street Suite 3000 San Francisco, CA 94105 (415) 393-8200 Counsel for Respondents QUESTION PRESENTED Section 806 of the Sarbanes-Oxley Act of 2002 provides “[w]histleblower protection for employees of publicly traded companies.” 18 U.S.C. § 1514A(a). The question presented is whether this provision covers only employees of public companies. ii LIST OF PARTIES Respondents FMR LLC, Fidelity Management & Research Company, FMR Co., Inc., and Fidelity Brokerage Services LLC disclose the following information: The named defendant FMR Corp. was merged into a limited liability company prior to the filing of the complaints in this action. FMR LLC is the surviving entity; FMR Corp. no longer exists. FMR LLC is the parent of Fidelity Management & Research Company. FMR Co., Inc. and Fidelity Brokerage Services LLC are indirect subsidiaries of FMR LLC. FMR LLC is not publicly held, and...
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...Sarbanes-Oxley Act of 2002 Analysis ACC561 May 15, 2015 Sarbanes-Oxley Act of 2002 Analysis The American government has taken significant measures to protect the public from fraud with-in corporations. Many federal laws have been enacted, regulatory bodies created and empowered to monitor and enforce those laws. The Sarbanes-Oxley Act, (SOX), of 2002 was an attempt to address several violations to the public trust from corporations that continued to occur despite the previous attempts to govern corporate responsibility to the public. This act specifically tried to reduce unethical corporate behavior and increase public confidence in the financial reporting of corporations (Kimmel, Weygandt, & Kieso, 2011). This paper will address if the requirements of SOX will be enough to prevent future fraud in the corporate environment. Regulatory Environment Several laws and regulations have been developed to attempt to control business practices. Corporations must follow rules that were established to protect the public from fraud such as fair practice laws, and regulatory agencies must ensure compliance with these long-standing regulations. The U.S. Securities and Exchange Commission, (SEC), “was developed to help protect investors, maintain fair, orderly, and efficient markets, and facilitate capital information” (U.S. Securities and Exchange Commission, 2015). The SEC was created in 1934 in response to the loss of public confidence in financial markets after the stock market...
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...Sarbanes-Oxley Act of 2002 Andrea Kelley ACC/561 Professor Melinda Gregg November 9, 2015 Introduction A regulatory agency is a representation of a governmental body, which is produced by a legislature. Regulatory agencies are implemented to enforce laws of legislative functions, executive functions, and judicial functions. The regulatory agencies plays a central role in the operation of the financial sector. There are a numerous variances of regulatory agencies, which all serve a different purpose in business law enforcement. Some of which include the Environmental Protection Agency, Occupational Health and Safety Administration, and the Securities and Exchange Commission. For the purpose of this paper, a description of the Securities and Exchange Commission will be given. Further describing the regulations which will protect the public from fraud within corporations and what that represents in the Sarbanes-Oxley Act of 2002. The Securities and Exchange Commission The mission of the U.S. Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation (SEC.gov, 2013). The SEC is the regulatory agency which governs securities markets and protects investors. It is a regulatory agency which oversees securities transactions, activities of financial professionals and mutual fund trading to prevent fraud and intentional deception (SearchFinancialSecurity.com, 2015). The SEC is composed of five commissioners...
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...the United States but considered ordinary or right in Amsterdam. Some ethical decisions go further than knowing what is the right thing to do, sometimes our emotions can get the best of us and leave us making poor decisions. When deciding the ethical thing to do in a situation you must set your emotions aside and base your decision on what you know or consider being right. Ethics is a large part of accounting. You are constantly faced with decisions where you need to decide the ethical thing to do. Whistleblowing involves the act of reporting wrongdoing within an organization to internal or external parties (Eaton & Akers, 2007).As a whistleblower your ethical decisions are what decide if you should blow the whistle. You know that adjusting numbers such as Enron did is wrong and unethical. Many people are afraid to blow the whistle though even if a company or employee is being unethical. They are afraid of the ramifications; will they lose their job, will another company hire them, and many other things. Most companies do have a whistle blower policy though, either a section within their own company or a third party. Many companies have a department within their own company so that way information...
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...SOX Act of 2002 ACC/561 UOP SOX Act of 2002 On July 30, 2002, President Bush signed into law the Sarbanes-Oxley Act of 2002, which he characterized as "the most far reaching reforms of American business practices since the time of Franklin Delano Roosevelt." The Act mandated a number of reforms to enhance corporate responsibility, enhance financial disclosures and combat corporate and accounting fraud, and created the "Public Company Accounting Oversight Board," also known as the PCAOB, to oversee the activities of the auditing profession. (Securities Exchange Commission, 2014) Over the years, there have been multiple fraud cases involving businesses’ accounting practices. Some of the motives range from misleading potential investors about the company’s earning to attract more investors and get more funding from banks to corporate executives taking a little more cash home in salaries, plus avoiding taxes to increase profits. The SEC was created to enforce statutes such as the Sarbanes-Oxley Act and others to try to prevent the massive amount of fraud that has been on the rise. Even after all these measures have been put forward, more than half of U.S. organizations that experienced fraud in the past two years reported an increase in the number of occurrences, according to a new survey by PricewaterhouseCoopers that also found a rise in accounting fraud, bribery and corruption, with cybercrime moving to the forefront of U.S. companies’ concerns. (Cohn, 2014) One of the...
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...The CEO of General Electric (GE) Jack Welch had said he only had three jobs: selecting the right people, allocating capital resources, and spreading ideas quickly. When talking to hundreds of GE managers Welch used to ask them not only about their ideas but who they have shared their ideas with, and who else has adopted them. He was the head of GE from 1981 till 2001. In 1980, the year before Welch became CEO, GE recorded revenues of roughly $26.8 billion. In 2000, the year before he left, the revenues increased to nearly $130 billion. When he left GE, the company had gone from a market value of $14 billion to one of more than $410 billion at the end of 2004, making it the most valuable and largest company in the world (Storrs, 2006). At the time of his retirement, Welch received a salary of $4 million a year, followed by his controversial retirement plan of $8 million a year, which included GE's $80,000 per month luxury apartment in Trump Tower (New York City), free food and wine, access to a $300,000 per month B737 corporate jet, VIP tickets to the Metropolitan Opera, the Knicks, Wimbledon, the US Open (tennis) and the Red Sox, an office and a secretary in the GE building and a limousine with driver. The impact of leadership on the bottom line is dramatic. A study by Andersen Consulting Institute for Strategic Change asserts that the stock price of companies perceived as being well led grew 900 percent over a 10-year period, compared to just 74 percent growth in companies...
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...Daniels Fund Ethics Initiative University of New Mexico http://danielsethics.mgt.unm.edu Integrating Business Ethics in Business Courses INTRODUCTION Teaching business ethics requires an understanding of the organizational dimensions of ethical decisionmaking. Although most people believe that employees learn to be ethical at home and school and through life experiences, the work environment creates challenges for even the most ethical person. For example, employees cannot always make independent ethical decisions due to a corporate culture that has many types of managers and employees using their own concepts of right and wrong. Managers sometimes pressure employees into questionable activities. However, business ethics becomes more transparent once an organization establishes codes of ethics, as well as compliance requirements and ethical leadership. The objective of this chapter is to provide some essential strategies for integrating business ethics into business courses. The authors examine the role of stakeholders, implications of the global financial crisis, and important issues in teaching business ethics, as well as providing resources to integrate business ethics successfully into a course. THE IMPORTANCE OF BUSINESS ETHICS Business courses provide an essential and dynamic foundation for students developing their business careers. Although it is important to teach many traditional concepts such as human resources and marketing, emphasizing emerging topics that are...
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...SPECIAL REPORT Top 10 Best Practices in HR Management For 2011 30610860 SPECIAL REPORT Top 10 Best Practices in HR Management For 2011 30610860 Executive Publisher and Editor in Chief: Robert L. Brady, J.D. Managing Editor–HR: Legal Editor: Editor: Production Supervisor: Graphic Design: Production & Layout: Patricia M. Trainor, J.D. Susan E. Prince, J.D. Elaine V. Quayle Isabelle B. Smith Catherine A. Downie Sherry Newcomb This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional services. If legal advice or other expert assistance is required, the services of a competent professional should be sought. (From a Declaration of Principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers.) © 2006-2011 BUSINESS & LEGAL REPORTS, INC. All rights reserved. This book may not be reproduced in part or in whole by any process without written permission from the publisher. Authorization to photocopy items for internal or personal use or the internal or personal use of specific clients is granted by Business & Legal Reports, Inc. For permission to reuse material from Top 10 Best Practices in HR Management for 2011, ISBN 1-55645-317-5, please go to http://www.copyright.com or contact the Copyright Clearance Center, Inc. (CCC), 222 Rosewood Drive...
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