Sarbanes-Oxley Act of 2002
In 2002 because of the loss of confidence among the investors of America, President George W. Bush signed the Sarbanes-Oxley Act into law. This law quickly became known as SOX. It was intended to ensure that the reliability of reported financial information was correct. It was intended to bring a raise in the confidence of the United States capital market. SOX was enacted to strengthen and protect the investors by improving the accuracy and reliability of corporate decisions. The Sarbanes-Oxley Act came about due to the many accounting scandals and unethical decisions made in many prominent companies within the United States. Some of the companies that caused this law to come into place are Enron, WorldCom (MCI), and Tyco International.
The big question about SOX is will it improve ethics? In section of 406 of SOX it requires that companies that are public, to have a code of conduct to go by. This code of conduct is mainly in effect for senior management and financial officers as well as directors, officers, and employees. This is an attempt for these companies to become aware of their own policies and procedures. Most companies have their own code of conduct that they must abide by but those are just words that most of the time becomes meaningless.
The Sarbanes-Oxley Act Section 802 pertains to corporate and criminal fraud accountability. In this section of SOX it imposes penalties of up to 10 years imprisonment for the accountants who knowingly and willingly violate the maintenance and review of an audit. It also imposes fines of up to 20 years for knowingly destroying documents or falsifying records on a legal investigation. All of these items are unethical.
SOX has had the greatest impact on organizations by dealing with ethics and laws such as patent laws, international copyright laws and laws related to disclosure requirements. Because of SOX there has been a superior impact on organizational ethics and have portrayed...