Most modern companies have a code of ethics, documented in their Code of Business Conduct, which details the ethical and behavioral requirements for their employees of how they operate their business. Employees are usually given the Code when they were hired and little if any emphasis is placed on training and ensuring understanding. "A code of professional ethics is a voluntary assumption of self discipline above and beyond the requirements of the law. The Code of Professional Ethics for public accountants was developed by the American Institute of Certified Public Accountant and includes several different categories" (AICPA, 2006). The first, Concepts of Professional Ethics, establis ...view middle of the document...
In 2002, Congress enacted the Sarbanes-Oxley Act (SOX). With the passing of this act several agencies began working to develop and enforce the ethical and legal standards of the business world.The Financial Accounting Standards Board (FASB) has a role as a financial reporting standard setter, with authority to develop new and ever-evolving standards, has recently received attention. Its mission is "to establish and improve standards of financial accounting and reporting for the guidance and education of the public, including issuers, auditors and users of financial information" (FASB, 2006).While the FASB is an independent, not-for-profit organization it has no authority to enforce the regulations. The standards and policies set by the FASB are broad in nature: it also provides guidance on implementation of standards (FASB, 2006). Responsibility for ensuring that financial statements comply with accounting requirements belong to the administration of the entity, the auditor of the entity's financial statements, and the Securities Exchange Commission (SEC).The United States Securities and Exchange Commission is the independent, non-partisan, federal agency that administers U.S. laws that provide protection for investors. The SEC was created under the Securities Exchange Act of 1934 to ensure that securities markets are fair and honest. In addition, the SEC acts as an advisor to federal courts in corporate reorganization proceedings under Chapter 11 of the Bankruptcy Reform Act of 1978. The Commission is composed of five members: a chairman and four commissioners. Commission members are appointed by the President, with the advice and consent of the Senate, for five-year terms, and the chairman is designated by the President.The SEC meets to deliberate on and resolve issues such as interpretations of federal securities laws, amendments to existing rules under the laws, new rules (usually to reflect changed conditions in the marketplace), actions to enforce the laws or to discipline those subject to direct regulation, legislation to be proposed by the SEC, and matters concerning administration of the Commission itself. The SEC has the authority to establish financial accounting and reporting standards but relies on the private sector for this function (FASB, 2006). To achieve it purpose, "the SEC requires public companies to disclose meaningful financial and other information. This provides a common pool of knowledge for all investors to use to judge for themselves whether to buy, sell, or hold a particular security (SEC, 2006). The SEC also upholds the Sarbanes-Oxley Act of 2002. The Sarbanes Oxley Act of 2002 was instigated as a direct result of the Enron, WorldCom and other accounting scandals in the US.Appointed by the SEC, the Public Company Accounting Oversight Board (PCAOB) oversees the audit of public companies. The PCAOB replaced the self-regulatory system of the past. The primary duties of the Board will include: registering pub...
