Kevin Schechter Professor Marvin Milich Business Law 12/7/14 Ethics - Has Sarbanes Oxley been effective in making Accountants more honest and ethical? The Enron scandal and subsequent legislation. Litigation under SOX. Does it need to be further revised? The Sarbanes-Oxley Act of 2002 (Sarbox Act) came into being as result of many accounting scandals at prominent firms. The act holds companies to a strict code of conduct requirements in relation to corporate governance, financial practices, and accounting controls, and puts into effect the enforcement of criminal penalties against those who violate them. The act consists of many sections and subsections regarding compliance. Section 201 of the Sarbanes-Oxley Act covers prohibited auditor …show more content…
It states that anybody who destroys, alters, falsifies, mutilates, conceals, covers up, or makes a false entry in any record or document with intent to obstruct, impede, or influence the investigation or proper administration of the administration of any matter within any agency of the United States shall be fined under specific title, imprisoned for up to 20 years, or both. It offers that whoever knowingly and willfully violates any rule or regulation put forth by the Securities and Exchange Commission shall be fined, imprisoned for up to 10 years, or …show more content…
It also brings into the light a substantial number of CEO ethics violations. When Enron faced its downfall, a few of its leadership were imprisoned. This occurrence was one of the most shocking and well known violations of ethics in history. The Securities and Exchange Commission (SEC) decided to investigate Enron’s accounting practices, which eventually led them to press charges against many high-ranking employees of the group. They were tried for knowingly manipulating accounting rules, and masking losses, as well as for bank fraud, insider trading, conspiracy, and money laundering. Due to the Enron scandal, Congress decided to pass the Sarbanes Oxley Act, to improve corporate accountability. At the same time as the Enron investigation, Worldcom began to discuss a merger with Sprint, however the Department of Justice shut such discussions down over worries of the creation of a monopoly. As a result of the situation, CEO Bernard Ebbers began to jack up the stock price of his company by creating entirely fraudulent accounting entries. The fraudulent activity was eventually discovered, and the resulting SEC investigation ended in the company’s bankruptcy filing. There were many other accounting scandals, including Hollinger International, Tyco, and