Rules on Business Ethics. SOX Standard
Author:Lector dr. Cristina Drumea
JEL:M48
DOI:
Keywords:SOX standard; business ethics; corporate fraud; Enron
Abstract:
The Sarbanes-Oxley law, officially named
„Public Company Accounting Reform and
Investor Protection Act” was adopted in 2002
in the United States in order to review the
accounting practices and to rebuild community’s
confidence in the Public Companies
Financial Reports. What were the events that
triggered the implementation of such ruling?
The answer lays in the over-displayed cases of
corporate frauds as Enron, WorldCom and
other famous bankruptcy scandals, all of them
having the same roots into the „creative
accounting” practices. This concept refers to
diverse actions taken in order to bewilder, hide
and embellish the economic and financial
reality of the companies throughout fraud
Accounting Reports. Business environment is
anyway subject to various demands to rule
against sophistication of corporate frauds,
thus legislation towards ethics in business was
to be expected. Question is how these new
rules and regulations will become effective for
the purpose they were created, given the fact
that they determine as well negative effects
such as the increase of the companies’ expenses
for financial and audit services or the limitation
of free action once the Surveillance
Commission [8] has mandate to stop their
transaction when appear to be doubtful. This
kind of standards is for now applicable only in
the American business environment, but it
already has effects on the companies everywhere,
including the Romanian ones. This
article explores the way this may occur, as
well as the pros and cons of the implementation
of such standards in our legislation.