Qs. What is the significance of the Sarbanes- Oxley Act?

From your perspective

what law(s) have had the greatest impact on organizational ethics? How? Please
explain.

Its human nature to abide by the rules, regulations and consequences except for people
who deviate from the path of effective organizational excellence.
Work ethics and minute details are important because ethics binds people together and
humans make up the organization.
Developing trust amongst employees is the key to any organizations success and its
core benefits at least one may be interdependence. The moral philosophy also called
business ethics is the separation of good conduct from bad conduct or mishandling.
Sarbanes-Oxley act was initiated by Senator Paul Sarbanes and Representative Michael
Oxley with its roots present in management and audit and has the position of a legislation
and covers the financial aspect of a law abiding organization . Altogether the Sarbanes-
Oxley act has eleven titles some of them that need to be highlighted are: 302, 401, 404,
409 and 802.

In 302 in general it is mentioned that the corporate responsibility as far as financial

reports are concerned must be present. To summarize it: the report must be reviewed by
an authority and it should not contain an untrue statement or misleading information.
The financial statements should present a picture of the financial condition of a firm and
a report must be presented by the signing officer who is responsible for internal controls
all in order to prevent indulgence in deficiencies and fraud. Also a report of the variables
attached with proper functioning of the report preventing a negative impact on the same.

In 401 Title IV of the act : this portion of the act states: Enhanced Financial Disclosures
especially the disclosure of the periodic reports must be observed.
All the published documents must be accurate and concise specially the information off-
balance sheet liabilities, transactions and intricate details in order to make the
transactions viable and authentic. Also in the commissions duties is to keep an eye on the
G.A.A.P(generally accepted accounting principals)results in tolerable reporting on the
issuers end.

In 404 Title IV of the act: to summarize: It is an obligation to publish relevant

information by the issuer/concerned party in the annual report concerning the internal
control structure for financial reporting. An attested assessment should take place of
these kind of internal controls and ways of doing things.

In 409 Title IV of the act: the concerned party on an urgent basis needs to make available
newly discovered information regarding the recent financial position of the company. The
above mentioned easy to understand disclosures along with graphical representations
must be presented as per requirement.
Sarbanes-Oxley act 802 Title VIII of the act (Fraud accountability)

A fine accompanied by imprisonment of 20,10and 5 years respectively for illustrating

mal-information or concealing the truth all in order to influence legal proceedings.

The changes made to professional financial reporting has resulted through the consent
of congress into Real-time disclosures , officer certification, increase in transparency and
mandated SEC review.
It may be a byline or a standard and a dramatic change to the federal securities law since
1930s it effects the reporting obligations and corporate governance on the whole.
The involved parties are legal council, officers, auditors, security analyst and
directors. Other laws besides SECP standards may include rules followed and designed
by banks as far as loans are concerned apart from that there are ISO standards to be met.

As far as work ethics is concerned (excerpt from Van Fleets book)

1881-1983.
The Beech-Nut Corporation case where they started selling
adulterated apple juice were charged with 215 felony
counts Beech-Nut knowingly sold fake apple juice under
the label ‘100% fruit juice’.
The melt down of Beech-Nut proves and requires selling of quality products especially
to children for their proper growth and development.

What differentiates ethical behavior from unethical behavior is “actions that confirm to
the norms accepted by most of the society with in which the actions occur”
Ethics are influenced by the follows peer influence, family influences, experiences,
values and morals, situational factors.
Ethics may form at an early stage of a child when his conditioning is starting and he is
being groomed to face the harsh calamities of this present world .All the above
mentioned factors are intrinsically related with ethics.

1.whatis.com
2.Footnotes :references taken from http://www.soxlaw.com/index.htm
3.Behavior in Organizations by Van Fleet.
Qs. 2. How can whistle-blowing be both a positive and/ or a negative situation for
many individuals? What are your personal feelings about whistle blowers? Please
explain.

Definition: whistle-blower: a person who witnesses illegal or unethical behavior by other

members of the organization and reports the illegal or unethical activity to organizational
or outside authorities and the phenomenon is called whistle blowers dilemma .
Before blowing the whistle a person need to analyze certain factors that need to be kept in
mind his/her status needs to be kept in mind before informing authorities on an issue
which can not be resolved otherwise. Knowing the responsible authority who can
effectively take action on the issue and also keeping every ones status in mind these and
many minute details that are related to the issue. By informing the authority immediately
two things can take place 1.an immediate promotion or 2.even the employee might get
fired (reprisal).
Reporting to immediate superiors is the key and if the whistle blower gets no response
then he/she can take the case to the media or top management. Certain ambiguous
situations such as fraud and cost overruns may need whistle blowing but need to be
handled very delicately and in a proficient manner.
Some people refer to the whistle blower as a (snitch) or a negative connotation is attached
to it however modern day organizations have realized its significance.
We can never determine the gravity and the havoc that whistle-blowing brings along but
it is obligatory to take decisions ethically. As we can never predict human behavior
one person at one time acts honestly at another time dishonestly. There is no sequential
order for the organizations employees to take decisions honestly. The general conditions
such as political, economic may also have an impact on the manager’s decision.
Ethical consent and keeping a rigorous eye on the conscience may help in proper decision
making.
Whistle-blowing can have both a positive and a negative impact on an individual if
authorities are not involved in unethical practices than it can have a positive impact
otherwise organizational politics come into action and may result in a negative impact.
Consequences may be a demotion as we know that absolute power corrupts absolutely
keeping yourself in the shadow of ethical behavior deliberately may help in the cause of
good conduct.
Whistle blower in my opinion are people fighting for a greater cause for instance people
believing in the societal marketing concept may have a soft corner for people who cannot
afford the basic necessities of life where societies as a whole rise.
A whistle-blower needs to stand up and prevent people for impounding their rights and to
prevent them from getting away with it.
Determining ones own moral standing and fiber demands decisions to be made in a brave
manner and reducing the margin of error by 50 %.
Some times the whistle blower becomes a victim of hate and anger due to their sole
reason of blowing the whistle on some one who was previously involved in an activity
which was illegal and unwanted the whistle blower needs to keep calm his nerves and
operate in an efficient manner without caring of the consequences. Keeping ones own
interest at stake and doing what is right on a long term basis.

References :1.Behavior in organizations by Van Fleet

2. Introduction to logic