Ethics And Sarbanes Oxley 2009 Gary Wheeler


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A brief presentation on best practices for corporate ethics and sarbanes oxley.

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Ethics And Sarbanes Oxley 2009 Gary Wheeler

  1. 1. Ethics In Organizations Gary Wheeler, SPHR, GPHR, CCP, CBP
  2. 2. Ethics <ul><li>What is ethics? </li></ul><ul><li>“Ethics is a set of values defining right from wrong.” </li></ul><ul><li>…ethical behavior is not black or white, right or wrong. </li></ul>
  3. 3. Ethics & the Individual <ul><li>Ethics are a personal set of values </li></ul><ul><li>…ethics are relative to our perception of reality, and are based on our point of view. </li></ul><ul><li>It begins when children are taught… </li></ul><ul><li>No one viewpoint can seek to define ethics. </li></ul>
  4. 4. Summary of Ethics <ul><li>…ethics should not intrude upon the private lives of other individuals who are not harming anyone. </li></ul>
  5. 5. Examples of Corporate Ethical Issues <ul><li>Cloning </li></ul><ul><li>Abortion </li></ul><ul><li>Religious tolerance </li></ul><ul><li>Homosexuality </li></ul><ul><li>Population growth </li></ul><ul><li>Gifts and persuasion </li></ul><ul><li>Drinking </li></ul><ul><li>Smoking </li></ul><ul><li>Gene therapy </li></ul><ul><li>Nuclear energy </li></ul><ul><li>Death penalty </li></ul><ul><li>Politics </li></ul><ul><li>Open and honest </li></ul><ul><li>Democracy </li></ul><ul><li>Dictatorships </li></ul>
  6. 6. Pressures that Compromise <ul><li>Following boss’s directive </li></ul><ul><li>Meeting aggressive financial objectives </li></ul><ul><li>Helping the organization survive </li></ul><ul><li>Meeting scheduled pressures </li></ul><ul><li>Wanting to be a team player </li></ul><ul><li>Saving jobs </li></ul>
  7. 7. Pressures continued <ul><li>Advancing boss’s career interest </li></ul><ul><li>Rationalizing that others do it </li></ul><ul><li>Feeling peer pressure </li></ul><ul><li>Resisting competitive threats </li></ul><ul><li>Advancing own career interests </li></ul>
  8. 8. Types of Misconduct <ul><li>Research survey by SHRM </li></ul><ul><li>24 types of misconduct observed </li></ul><ul><li>Top Five </li></ul><ul><ul><li>Misreporting hours worked </li></ul></ul><ul><ul><li>Employees lying to supervisors </li></ul></ul><ul><ul><li>Management lying to employees, customers, vendors or the public </li></ul></ul><ul><ul><li>Misuse of organizational assets </li></ul></ul><ul><ul><li>Lying on reports / falsifying records </li></ul></ul>
  9. 9. Conflict of Interest <ul><li>Conflict of interest: bribes, kickbacks, sharing inside information, falsifying records, defrauding customers, obstructing an investigation </li></ul>
  10. 10. Protection of Company Assets <ul><li>Protection of company assets: misuse of company property, cash, information, ideas, intellectual property </li></ul>
  11. 11. Employment Practices <ul><li>Employment work practices: Federal, state laws: sexual harassment, civil rights violations, discrimination, etc., reporting violations </li></ul>
  12. 12. Antitrust <ul><li>Antitrust: laws, price fixing, bid rigging, allocation of customers, restraint of trade, how to distance yourself from a possible violation </li></ul>
  13. 13. Environmental Protection <ul><li>Environmental protection: strict legal compliance with corporate, state and federal laws, personal and corporate responsibility </li></ul>
  14. 14. Influences of Ethical Behavior <ul><li>Personal values </li></ul><ul><li>Credible enforcement of ethics violations </li></ul><ul><li>Attitude and behavior of supervisors </li></ul><ul><li>Attitude and behavior of senior managers </li></ul><ul><li>Friends and co-workers </li></ul><ul><li>Internal drive to succeed </li></ul><ul><li>Ethics related legislation </li></ul>
  15. 15. Corporate and Criminal Fraud Accountability Act SOX
  16. 16. The Sarbanes-Oxley Act <ul><li>Sarbanes-Oxley Act of 2002 </li></ul><ul><li>Required by law </li></ul><ul><li>Major changes to the regulation of financial practice and corporate governance </li></ul><ul><li>Named after Senator Paul Sarbanes and Representative Michael Oxley </li></ul>
  17. 17. Reporting Responsibility <ul><li>Corporate officers have reviewed the final report </li></ul><ul><li>No untrue statements or omissions </li></ul><ul><li>Financial statements and related information fairly present the financial condition </li></ul><ul><li>The signing officers are responsible for internal controls and have evaluated these internal controls within the previous ninety days and have reported on their findings </li></ul>
  18. 18. Reporting Responsibility cont. <ul><li>List of all deficiencies in the internal controls and information on any fraud that involves employees who are involved with internal activities </li></ul><ul><li>Any significant changes in internal controls or related factors that could have a negative impact on the internal controls </li></ul>
  19. 19. Disclosure of Periodic Reports <ul><li>Financial statements are published by issuers are required to be accurate and presented in a manner that does not contain incorrect statements or admit to state material information. </li></ul><ul><li>These financial statements shall also include all material off-balance sheet liabilities, obligations or transactions. </li></ul>
  20. 20. Management Assessment <ul><li>Issuers are required to publish information in their annual reports concerning the scope and adequacy of the internal control structure and procedures for financial reporting. </li></ul><ul><li>This statement shall also assess the effectiveness of such internal controls and procedures. </li></ul>
  21. 21. Management Assessment cont. <ul><li>The registered accounting firm shall, in the same report, attest to and report on the assessment on the effectiveness of the internal control structure and procedures for financial reporting. </li></ul>
  22. 22. Real Time Issuer Disclosures <ul><li>Issuers are required to disclose to the public, on an urgent basis, information on material changes in their financial condition or operations. These disclosures are to be presented in terms that are easy to understand supported by trend and qualitative information of graphic presentations as appropriate. </li></ul>
  23. 23. Criminal Penalties <ul><li>Up to 20 years imprisonment for altering, destroying, mutilating, concealing, falsifying records, documents or tangible objects with the intent to obstruct, impede or influence a legal investigation. </li></ul><ul><li>Up to 10 years for any accountant who knowingly and willfully violates the requirements of maintenance of all audit or review papers for a period of 5 years </li></ul>
  24. 24. Corporate Sentencing Guidelines <ul><li>Company fines </li></ul><ul><li>Individual fines </li></ul><ul><li>Jail time </li></ul><ul><li>Loss in share value </li></ul><ul><li>Company reputation </li></ul><ul><li>Impact to employee morale </li></ul><ul><li>Recruiting and attracting talent </li></ul>
  25. 25. Best Practices
  26. 26. Accountability <ul><li>Corporate Compliance Officer </li></ul><ul><li>Internal Audit Team </li></ul><ul><li>Board of Director Responsible </li></ul><ul><li>Board Audit Sub-Committee </li></ul><ul><li>Training </li></ul><ul><li>Tracking and monitoring tools </li></ul>
  27. 27. Business Code of Conduct <ul><li>An outline of responsibilities of or best practice for an individual or the organization </li></ul><ul><li>Set of principles of good corporate behavior adopted by the company </li></ul>
  28. 28. Training and Communication <ul><li>Ethics and Integrity </li></ul><ul><ul><li>New employee orientation </li></ul></ul><ul><ul><li>Policy and/or employee handbook </li></ul></ul><ul><ul><li>Periodic discussions in meetings </li></ul></ul><ul><ul><li>Formal annual communication </li></ul></ul><ul><ul><li>Performance reviews </li></ul></ul><ul><ul><li>Employee hotline </li></ul></ul>
  29. 29. Whistle-blower Act <ul><li>A whistleblower is an employee, former employee, or member of an organization, especially a business or government agency, who reports misconduct to people or entities that have the power and presumed willingness to take corrective action. </li></ul><ul><li>Generally the misconduct is a violation of law, rule, regulation and/or a direct threat to public interest -- fraud, health, safety violations, and corruption are just a few examples </li></ul>
  30. 30. Voluntary Reporting <ul><li>Immediately report appropriately </li></ul><ul><ul><li>Board of Directors </li></ul></ul><ul><ul><li>Government </li></ul></ul><ul><ul><li>Shareowners </li></ul></ul><ul><li>Correct and put controls in place </li></ul>
  31. 31. Discipline <ul><li>The punishment should fit the crime </li></ul><ul><li>Unintentional </li></ul><ul><ul><li>Write-up </li></ul></ul><ul><ul><li>Impact on performance review </li></ul></ul><ul><li>Deliberate </li></ul><ul><ul><li>Termination </li></ul></ul>
  32. 32. Social Responsibility <ul><li>Report appropriate information </li></ul><ul><ul><li>Suppliers and Vendors </li></ul></ul><ul><ul><li>Employees </li></ul></ul><ul><ul><li>General public </li></ul></ul>
  33. 33. Thank You