Module 2 - Module 2 Reading Chapter 2 Sarbanes-Oxley Act...

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Module 2 Reading: Chapter 2 Sarbanes-Oxley Act: Federal legislation designed to deter and punish corporate and accounting fraud and corruption and to protect the interests of workers and shareholders through enhanced financial disclosures, criminal penalties on CEOs and CFOs who defraud investors, safeguards for whistle- blowers, and establishment of new regulatory body for public accounting firms. Business Ethics: Standards of conduct and moral values involving right and wrong actions arising in the work environment. Minimum Requirements for Ethics Compliance Programs Compliance standards and procedures: Establish standards and procedures, such as codes of ethics and identification of areas of risk, capable of reducing misconduct or criminal activities. High-level personnel responsibility: Assign high-level personnel, such as boards of directors and top executives, the overall responsibility to actively lead and oversee ethics compliance programs. Due care in assignments: Avoid delegating authority to individuals with a propensity for misconduct or illegal activities. Communication of standards and procedures: Communicate ethical requirements to high-level officials and other employees through ethics training programs or publications that explain in practical terms what is required. Establishment of monitoring and auditing systems and reporting system: Monitor and review ethical compliance systems and establish a reporting system employees can use to notify the organization of misconduct without fear of retribution. Enforcement of standards through appropriate mechanisms: Consistently enforce ethical codes, including employee discipline. Appropriate responses to the offense: Take reasonable steps to respond to the offense and to prevent and detect further violations. Self-Reporting: Report misconduct to the appropriate government agency. Applicable industry practice or standards: Follow government regulations and industry standards. Stages of Moral and Ethical Development: Stage 1 Preconventional: Individual is mainly looking out for his or her own interests. Rules are followed only out of fear of punishment or hope of reward. Stage 2 Conventional: Individual considers the interests and expectations of others in making decisions. Rules are followed because it is a part of belonging to the group.
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Stage 3 Postconventional: Individual follows personal principles for resolving ethical dilemmas. He or she considers personal, group, and societal interests. Conflict of Interest: Situation in which an employee must make a decision about a business’s welfare versus personal gain. Whistle-blowing: Employee’s disclosure to company officials, government authorities, or the media of illegal, immoral, or unethical practices committed by an organization.
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