UofP - MBA560 - Scenario Two - Read Me First - 06-25-06

UofP - MBA560 - Scenario Two - Read Me First - 06-25-06 -...

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MBA/560 Read Me First Scenario Two—CareNetWest This portion of the course will expose you to a set of enterprise risk management challenges that have evolved directly from the corporate accounting scandals in the early years of this decade. Following Enron, WorldCom, and other corporate wrongdoers, the United States Congress, the Securities and Exchange Commission (SEC), the major stock exchanges, and other interested parties sought to establish greater control over the financial and other activities of public corporations and their officers and directors. Of primary concern was the negative impact these scandals might have on long-term investor confidence in the U.S. capital markets and a desire to “right that ship.” In what has become sweeping legislation, Congress passed the Sarbanes-Oxley Act of 2002, appropriately subtitled, “To protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to the securities laws, and for other purposes.” SOX (as it has not-so- affectionately become known), now codified into governing SEC regulation, has transformed the required control structures of most public companies in this country, forcing each to employ extensive resources to ensure initial and ongoing compliance. Similar requirements have been adopted by the major stock exchanges upon which these companies are listed, and a once infantile profession, that of corporate governance, has grown exponentially, driven by the desire on the part of corporations not to be tainted by the types of practices thought to have brought down Enron and its brethren. An argument has been made that Sarbanes Oxley is an attempt to legislate ethics. The assumption in that argument is that, absent a legal mandate, corporate leaders will not act ethically in the management of their companies. As you study SOX and think about the burdens the Act places on public companies, consider whether the law might have been reactionary given the public scrutiny of and attention on the accounting scandals. Consider whether all of corporate America should be asked to literally pay the price for the actions of a few “bad apples.” Finally, consider whether a law like SOX can really prevent wrongdoers from finding ways to circumvent established controls. Perhaps addressing the causes of and motives for this sort of behavior is a more effective way to deal with what is likely an ethical dilemma. During the first three weeks of the course, you studied enterprise risk, with a focus on the legal risks facing the organization. Part of the legal—specifically, the regulatory —environment of business, is a major component known as administrative law. As you saw, administrative agencies are, in most cases, quasi–executive branch entities that regulate certain activities. Most business regulation in the United
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This note was uploaded on 06/12/2011 for the course ETHICS mba taught by Professor Wilkes during the Spring '05 term at University of Phoenix.

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UofP - MBA560 - Scenario Two - Read Me First - 06-25-06 -...

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