Ethics Article Analysis

465 WordsSep 20, 20082 Pages
Ethics Article Analysis The Sarbanes-Oxley Act (SOX) of 2002 serves as a constraint and deterrent to immoral and criminal corporate conduct that ultimately affects stakeholders and stockholders (Weiss, 2006, p. 183). Section 406 of the Sarbanes-Oxley Act requires publicly traded companies to disclose if they have a code of ethics for senior financial officers, and if not, why not. Few companies will wish to explain why they do not have such a code, so it is likely that those publicly traded companies that do not have a code of ethics are in the process of developing one (Gaumnitz & Lere, 2008). According to the act, a code of ethics comprises standards “reasonably necessary to promote honest and ethical conduct; full, fair, accurate, timely and understandable disclosures; and compliance governmental rules and regulations (Gaumnitz & Lere, 2008). A code of ethics serves as a guide for individuals who face novel ethical situations. The code also serves as a general statement of company expectations for individuals when faced with situations with ethical dimensions (Gaumnitz & Lere, 2008). An effective code of ethics policy may mean the difference between an ethical decision and a criminal one. When written correctly and followed by all levels of employees, the policy empowers individuals to make the right choice. Code statements can be classified according to the potential impact on decision-making and the known ethical position of senior level management (Gaumnitz & Lere, 2008). Code statements addressing ethical issues where there is no position or there is a mild disagreement are the decisions that will most likely have an impact on individuals (Gaumnitz & Lere, 2008). For the code to be effective, it should encourage employees to seek guidance, without fear of reprisals, as needed to make decisions. A well-defined code of ethics policy protects all

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