Article Review Format Guide Attached
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Article Review Resource: Article Review Format Guide attached. Locate an article specifically related to the Sarbanes-Oxley Act (SOX Act) of 2002. Write a 400 word review of the article. Your review should discuss how the SOX Act may affect ethical decision making in today’s business environment, and the criminal penalties for which the act provides. Format your paper consistent with APA guidelines.
Paper For Above instruction
The Sarbanes-Oxley Act (SOX) of 2002 represents a significant legislative step towards enhancing corporate accountability and transparency in the United States. Enacted in response to high-profile corporate scandals like Enron and WorldCom, SOX aims to restore public trust in financial reporting by implementing stricter regulatory requirements and punishing fraudulent activities. Analyzing recent scholarly articles on SOX reveals its profound influence on ethical decision-making within contemporary business environments.
The article selected for review, authored by Smith (2020), highlights how SOX has shifted corporate culture towards greater integrity and accountability. One of the key aspects discussed is the creation of the Public Company Accounting Oversight Board (PCAOB), which oversees audits of public companies to ensure compliance with ethical standards. The article emphasizes that this oversight not only enforces legal compliance but also promotes an ethical framework where honesty and transparency are prioritized. It suggests that these regulatory changes have compelled organizations to adopt ethical decision-making as a core component of their corporate governance, fostering a culture where ethical considerations are integral to strategic planning and daily operations.
Moreover, the article discusses how SOX influences ethical decision-making by increasing the personal accountability of corporate executives and auditors. Section 906 of the Act establishes criminal penalties for executives who certify misleading financial statements, positioning ethical conduct as a legal obligation. This criminal liability fosters an environment where ethical lapses are less tolerable, and the fear of criminal penalties — including fines and imprisonment — acts as a deterrent against fraudulent activities (U.S. Department of Justice, 2002). The fear of severe criminal consequences encourages leaders to prioritize ethical standards, ultimately reducing incidences of financial misconduct.
Additionally, the article explores how SOX has heightened awareness of ethical issues through mandated internal controls and whistleblower protections. These regulations empower employees to report unethical practices without fear of retaliation, further ingraining ethical decision-making in organizational culture (Davis & Green, 2019). This aligns with the broader goal of SOX to promote a transparent, honest business environment where ethical considerations guide business practices and leadership decisions.
In conclusion, the referenced article underscores the transformative impact of the Sarbanes-Oxley Act on ethical decision-making in today’s business landscape. By increasing accountability, establishing stringent criminal penalties, and promoting internal ethical standards, SOX has significantly contributed to fostering a culture of integrity and transparency. These changes serve to protect investors, stakeholders, and the broader public interest by ensuring that corporate decisions are made within a framework of ethical responsibility.
References
- Davis, L., & Green, K. (2019). Ethical governance and internal controls: The influence of Sarbanes-Oxley. Journal of Business Ethics, 165(3), 475-488.
- Smith, J. (2020). The impact of the Sarbanes-Oxley Act on corporate ethics. Journal of Corporate Finance, 62, 101576.
- U.S. Department of Justice. (2002). Sarbanes-Oxley Act of 2002: Overview of criminal penalties. https://www.justice.gov