SARBANES OXLEY: EXPORTING CORPORATE COMPLIANCE
When overseas businesses are purchased by regional subsidiaries, it easy to overlook cultural differences in how business are conducted. The question becomes, “Should U.S. companies try to export their corporate compliance programs to their overseas operations? As globalization spreads, U.S. companies are discovering that the complexity of doing business overseas is changing. For instance, the Foreign Corrupt Practices Act prohibits any sort of bribery and influence peddling (Alles, Kogan, Vasarhelyi, 2004). The Sarbanes-Oxley Act is a U.S. federal law enacted on July 30, 2002 in response to the number of major corporate and accounting scandals that cost investors billions of dollars when the share prices of affected companies collapsed, and shook public confidence in the nation’s securities market (Farrell, 2005). Sarbanes-Oxley in conjunction with the Foreign Corrupt Practices Act, combine their compliance efforts to make anti-corruption policies consistent not just in the U.S. but worldwide.”
Many U.S.-based multinationals have concluded that their compliance programs, in the United States and overseas, must cover their employees and operations. Consequently, they face creating corporate compliance programs that are effective in operation and relevant to employees in countries whose cultures, languages and systems of law may contrast starkly with the situation prevailing in the United States.
As far back as 1939, the New York Stock Exchange recommended that NYSE-traded companies have an established audit committee of the board of directors, and an established standard of business practice in order to monitor a company’s compliance. Since that time, the role of the board audit committee and the scope of corporate compliance programs have expanded steadily (Blue & Model, 2002).
It was believed that the Sarbanes-Oxley Act of 2002 (SOX) was Congress’s answer to the corporate scandals of WorldCom and...