FIN 6409 - Financial Management - Loraine J Jackson - Course Project - Week Three

8/18/2019 FIN 6409 - Financial Management - Loraine J Jackson - Course Project - Week Three

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Running head: SARBANES-OXLEY ACT & CORPORATE GOVERNANCE 1

Sarbanes-O!e" A#$ & C%r%ra$e G%'ernan#e

C%urse Pr%(e#$

L%raine ) )a#*s%n

+,N ./0 - +inan#ia! anage2en$

,ns$ru#$%r: 3r4 5arren 5righ$

ar#h 167 8/1


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SARBANES-OXLEY ACT & CORPORATE GOVERNANCE 8

Abs$ra#$

The Sarbanes-O!e" A#$ 9as assed in 8//8 b" C%ngress as a sae$" 2easure $% be$$er r%$e#$

in'es$%rs and s$a*eh%!ders r%2 $he %ssibi!i$" % raudu!en$ a##%un$ing a#$i'i$ies b" %i#ia!s in

ub!i#!" $raded #%r%ra$i%ns7 #%2an" b%ards7 and ub!i# a##%un$ing ir2s4 This a#$ se!!s %u$

ne9 and eanded re;uire2en$s %r a!! ub!i# #%r%ra$i%ns as 9e!! as r%'isi%ns $ha$ a!" $%

ri'a$e!" he!d #%2anies4 This A#$ 2a*es #!ear $he s$ringen$ re%r2s as a 2e$h%d $% i2r%'e

inan#ia! dis#!%sures r%2 #%r%ra$i%ns4 Addi$i%na!!"7 $his a#$ 9i!! assis$ in $he re'en$i%n %

a##%un$ing raud and $% as ensuring $he in$egri$" % $he inan#ia! 2ar*e$s7 as 9e!! as $% a!!%9

in'es$%rs $% a##ura$e!" 2easure 2anage2en$ er%r2an#e4 There is $he need %r i2r%'ed

#%r%ra$e g%'ernan#e b" 2anagers and $% ee#u$i'es4 The s#anda!s %'er $he as$ se'era! "ears

ha'e in'%!'ed $% ee#u$i'es7 audi$%rs7 e'en %!i$i#ians and regu!a$%rs7 as 9e!! as s$a*eh%!ders

and e2!%"ees4 S$a$e2en$s and a#$i%ns % s%2e $% %i#ia!s under2ined $he s%#ie$"


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%n #%2!ian#e> 6/87 ./17 ./.7 ./07 ?/8 and 0/ @Sarbanes-O!e" 1/17 8/1.4 This A#$ 9as

de'e!%ed as a resu!$ % 'ari%us inan#ia! s#anda!s in $he "ears su#h as Enr%n7 Ar$hur Andersen7

5%r!dC%27 and T"#%7 %r ins$an#e4 ,$ is $he 2%s$ #%2rehensi'e se#uri$ies !egis!a$i%n $% be

#rea$ed in $he ni$ed S$a$es7 re;uiring a!! #%r%ra$i%ns $% i!e re%r$s 9i$h $he Se#uri$ies and

E#hange C%22issi%n @SEC %n a regu!ar basis4 C%r%ra$i%ns and %$her en$errises are re;uired

$% ha'e res%nsibi!i$ies %r re%r$ing and #%r%ra$e %b!iga$i%ns as 9e!! as grea$er a##%un$abi!i$"7

9i$h n%n-#%2!ian#e resu!$ing in se'ere ena!$ies4

Greater Accountability

The Sarbanes-O!e" A#$ a!s% has an %'ersigh$ b%ard7 9hi#h 9as #rea$ed $% suer'ise

audi$s % ub!i# #%r%ra$i%ns7 $hus r%'iding grea$er a##%un$abi!i$" %r #%2anies4 This is $he

se#$i%n % $he A#$ $ha$ es$ab!ishes $he #ri$eria and $he regu!a$i%ns %r audi$ re%r$s4 +ur$her2%re7

a!! a##%un$ing ir2s 9h% are res%nsib!e %r audi$ing ub!i# #%r%ra$i%ns are re;uired $% regis$er

9i$h $he O'ersigh$ B%ard @Si2%n7 8//04 This b%ard a!s% a!s% ea2ines7 s#ru$ini=es7 and u$

in$% ee#$ #%2!ian#e r%2 #%2anies $ha$ are regis$ered4 There is a grea$er inan#ia! dis#!%sure

re;uiring a!! $ransa#$i%ns and $ha$ 2a" i2a#$ inan#ia! s$a$us $% be dis#!%sed4 +%r ins$an#e7 a

ers%na! !%an $% a $% ee#u$i'e r%2 a #%r%ra$i%n is r%hibi$ed4 Addi$i%na!!"7 "ear!" re%r$s are

re;uired $% in#!ude in%r2a$i%n s$a$ing $ha$ 2anage2en$ is a##%un$ab!e %r in$erna! #%n$r%!

#%2%si$i%n and r%#esses %r inan#ia! re%r$ing4 The Sarbanes-O!e" A#$ re;uires

#%r%ra$i%ns and audi$%rs ha'e grea$er res%nsibi!i$" in $he inan#ia! re%r$ing and $he audi$ing

ase#$ % #%r%ra$e business4 +ur$her7 #%r%ra$e res%nsibi!i$" %r inan#ia! re%r$s #an be %und

in Se#$i%n 6/8 % $he Sarbanes-O!e" A#$7 9hi#h s$a$es $ha$ $he CEO and C+O are dire#$!"

res%nsib!e %r $he a##ura#"7 d%#u2en$a$i%n and sub2issi%n % a!! inan#ia! re%r$s @Sarbanes-


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SARBANES-OXLEY ACT & CORPORATE GOVERNANCE .

O!e" 1/17 8/1.4 These inan#ia! re%r$s sh%u!d n%$ #%n$ain an" 2isreresen$a$i%ns and $his

in%r2a$i%n is $% be resen$ed in a air and a##ura$e 2anner7 and $his is dis#ussed in se#$i%n ./14

Financial Disclosure

Se#$i%ns % $he Sarbanes-O!e" A#$ a!s% #%'er inan#ia! dis#!%sure4 +inan#ia! s$a$e2en$s

are re;uired $% be re#ise and resen$ed in a 2anner ree % in#%rre#$ s$a$e2en$s %r in%r2a$i%n4

A##%rding $% Sarbanes-O!e"7 inan#ia! s$a$e2en$s 2us$ a!s% in#!ude a!! da$a7 %-ba!an#e shee$

!iabi!i$ies7 %b!iga$i%ns %r $ransa#$i%ns4

B Compliance

C%r%ra$i%ns 2us$ re2ain in #%2!ian#e 9i$h $hese !a9s and regu!a$i%ns4 )us$ as i$ is

ne#essar" 9i$h an" %$her $"e % regu!a$%r" re;uire2en$s7 #%2!ian#e $% SOX regu!a$i%ns sh%u!d

be dea!$ 9i$h in a 2e$h%di#a! 2anner $hr%ugh $he use % s$ud" and r%er ana!"sis4 Addi$i%na!!"7

#%2!ian#e sh%u!d be !anned and ee#u$ed as a $"i#a! r%(e#$ 9i$hin an %rgani=a$i%n4

+ur$her2%re7 s%2e se#$i%ns % $he a#$ are 2%re er$inen$ $% #%2!ian#e $han %$hers7 and s%2e %

$he se#$i%ns su#h as se#$i%n 6/8 % $he Sarbanes-O!e" A#$7 9hi#h s$a$es $ha$ $he CEO and C+O

are dire#$!" res%nsib!e %r $he sub2issi%ns % inan#ia! re%r$s as 9e!! as $he in$erna! #%n$r%!

s$ru#$ure $% $he SEC4 An%$her se#$i%n is se#$i%n ./.7 9hi#h is 'ie9s as being $he 2%s$

#%2!i#a$ed7 #%n$es$ed7 and 2%s$ eensi'e $% i2!e2en$ % a!! $he Sarbanes O!e" A#$ se#$i%ns

%r #%2!ian#e @Sarbanes-O!e" 1/17 8/1.4 This se#$i%n s$a$ed $ha$ a!! annua! inan#ia! re%r$s

2us$ in#!ude an ,n$erna! C%n$r%! Re%r$7 and regis$ered e$erna! audi$%rs 2us$ indi#a$e $% $he

a##ura$eness % #%2an" 2anage2en$ de#!ara$i%n $ha$ in$erna! a##%un$ing #%n$r%!s are in !a#e7

un#$i%ning and are ee#$i'e4 These areas % $he regu!a$i%n i2r%'ed re%r$ing s$andards and

$ha$ re;uire 2anage2en$ $% r%'ide an ana!"sis % $he ei#ien#" % in$erna! 9hi#h 9i!! assis$ an

%rgani=a$i%n 9i$h inan#ia! re%r$ing and #%2!ian#e4


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SARBANES-OXLEY ACT & CORPORATE GOVERNANCE

II Other Areas of the Sarbanes-Oxley Act

Protectin !histleblo"ers

,n#!uded in Sarbanes-O!e"7 $here is a se#$i%n7 9hi#h se!!s %u$ $he r%$e#$i%n %r

e2!%"ees % ub!i#!" $raded #%2anies 9h% r%'ide e'iden#e % raud4 This is se#$i%n ?/4

Sarbanes-O!e" en#%urages $he dis#!%sure % #%r%ra$e raud b" r%$e#$ing e2!%"ees %

ub!i#!" $raded #%2anies %r $heir subsidiaries 9h% re%r$ i!!ega! a#$i'i$ies @Sarbanes-O!e" 1/17

8/1.4 The 3ear$2en$ % Lab%r is au$h%ri=ed $% r%$e#$ indi'idua!s r%2 re$a!ia$i%n and a!s%

$he" #an #ri2ina!!" #harge $h%se indi'idua!s 9h% are $% b!a2e %r $he re$a!ia$i%n4 This r%$e#$i%n

sh%u!d en#%urage e2!%"ees and %$her indi'idua!s $% r%'ide in%r2a$i%n $% $he SEC i $he" ee!

$here 9as a 'i%!a$i%n re!a$ing $% an" $"e % raudu!en$ a#$i'i$" agains$ s$a*eh%!ders7 in'es$%rs7 %r

%$her indi'idua!4

Fraud Pre#ention

As a resu!$ % r%'isi%ns and regu!a$i%ns in $he Sarbanes-O!e" A#$7 and ena!$ies $ha$

#%u!d be en%r#ed7 ins$an#es % raud are seen $% be grea$!" redu#ed4 ,n addi$i%n7 ins$an#es %

raud are signii#an$!" !essened b" an %rgani=a$i%n using a #%2!ian#e-based r%gra27 9hi#h

e2hasi=es $heir e%r$s %n re'en$i%n $hr%ugh $he $hrea$ % dis#%'er" and ena!$ies %r 'i%!a$i%ns

% $he !a9 %r #%de % #%ndu#$ 9i$hin an %rgani=a$i%n4 A##%rding $% Dess @8//7 $ea#hing

e2!%"ees $he regu!a$i%ns and guide!ines $he" 2us$ %bser'e in re!a$i%n $% an in$egri$"-based

r%gra27 !a#es e2hasis %n in#%r%ra$ing e$hi#s in$% $heir de#isi%n-2a*ing and 2%$i'a$ing

$hese indi'idua!s $% rea!i=e $he e$hi#a! idea!s % $he #%r%ra$i%n4 +ur$her7 %rgani=a$i%ns $ha$

e2!%" an in$egri$"-based ar%a#h7 e2hasi=es #rea$ing !egi$i2a#" 9i$h indi'idua!s in an

%rgani=a$i%n $hr%ugh 'a!ues and se!-g%'ernan#e $ha$ has been de'e!%ed in$erna!!" in a ir2


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@Dess7 8//4 Obedien#e $% $he !a9 is based %n a sense % 2%ra! %b!iga$i%n $% %be" !a9s and

regu!a$i%ns b" an indi'idua! n%$ based %n $he $hrea$ % unish2en$4

Internal Controls and Processes

,n$erna! #%n$r%! is deined as a r%#ess $ha$ is ae#$ed b" a b%ard % dire#$%rs7

2anage2en$ and %$her ers%nne!7 $ha$ is in$ended $% r%'ide reas%nab!e assuran#e in regards $%

rea#hing %b(e#$i'es su#h as $he ee#$i'eness and ei#ien#" % %era$i%ns7 $he re!iabi!i$" %

inan#ia! re%r$ing and #%2!ian#e 9i$h a!i#ab!e !a9s and regu!a$i%ns @3ra=7 8/114 ,n %rder $%

i2!e2en$ ee#$i'e raud re'en$i%n7 i$ is #ri$i#a! $ha$ $he a$$i$ude % a #%2an" ha'e a $%ne $ha$

is se$ a$ $he $% % $he %rgani=a$i%n7 9i$h s$r%ng a$$i$udes7 $ransaren#"7 and in$erna! #%n$r%!s

being r%2%$ed $hr%ugh%u$ $he en'ir%n2en$4 These in$erna! #%n$r%!s sh%u!d de'e!% and

r%gress %'er $i2e as #hanges in $he business su#h as $e#hn%!%gi#a! ad'an#es and $he raud

en'ir%n2en$ 'aries in res%nse $% #%2e$i$i'eness7 indus$r" ra#$i#es7 regu!a$i%ns and ne9 !a9s7

and e#%n%2i# en'ir%n2en$s4 ,n regard $% Sarbanes-O!e" Se#$i%n 6/87 $his se#$i%n re;uires

#%r%ra$e %i#ers be res%nsib!e %r in$erna! #%n$r%!s and ha'ing e'a!ua$ed $hese in$erna!

#%n$r%!s7 *ee a re#%rd % an" insui#ien#ies in $he in$erna! #%n$r%!s7 as 9e!! as signii#an$

#hanges $ha$ #%u!d ha'e a nega$i'e i2a#$ %n $he in$erna! #%n$r%!s @R%senbau27 8/1/4

III Corporate Go#ernance

$thics at the Core

E$hi#s is a$ $he #en$er % #%r%ra$e g%'ernan#e7 and 2anage2en$ 2us$ ehibi$

a##%un$abi!i$" %r $heir a#$i%ns %n a !%#a!7 na$i%na!7 and g!%ba! s#a!e4 Business %era$i%ns #ann%$

be e$hi#a!7 bu$ $% ee#u$i'es and #%r%ra$e %!i#"2a*ers #an u$ in$% %era$i%n e$hi#s 9i$hin $he

s$ru#$ure % $he business s$ra$eg" % an %rgani=a$i%n4 +ur$her2%re7 #%r%ra$e e$hi#s and $he


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desire %r ha'ing a r%i$ab!e business 2us$ be a!igned 9i$h s$a*eh%!ders4 ,$ is u $% high ran*ing

ee#u$i'es $% 2a*e sure $ha$ e$hi#s and $he desire %r r%i$abi!i$" are b%$h su%r$ed4 A##%rding

$% Brigha27

FA ir2


8/14

SARBANES-OXLEY ACT & CORPORATE GOVERNANCE ?

r%#edures $ha$ i2a#$ %era$i%ns and $he de#isi%ns 2ade b" i$s 2anagers %r a #%r%ra$i%n4

There are i2!i#a$i%ns %r #%2an" beha'i%r in regard $% $he 2anner e2!%"ees are $rea$ed7 in

addi$i%n $% shareh%!ders7 #%nsu2ers and ban*s @,2r%'ing Business Beha'i%ur: 5h" 9e need

C%r%ra$e G%'ernan#e7 8/14 G%%d #%r%ra$e g%'ernan#e !a"s a #ri$i#a! r%!e in rein%r#ing $he

in$egri$" and ei#ien#" % inan#ia! 2ar*e$s4 C%n'erse!"7 %%r #%r%ra$e g%'ernan#e de$eri%ra$es

$he %$en$ia! % a #%2an"7 %ening $he d%%r %r inan#ia! dii#u!$ies and %ssib!" raud r%2

inside %n 2an" !e'e!s4 There%re7 i$ is #ru#ia! %r s$andards $% be se$ and %!!%9ed b" a!! 9i$hin

$he %rgani=a$i%n4 , a #%2an" is g%'erned 9e!! r%2 $he $% d%9n7 $"i#a!!"7 $he" 9i!! be

su##essu! as e2!%"ees 9i!! a#$ in a##%rdan#e $% $% ee#u$i'es4 ,n addi$i%n $% es$ab!ishing

s$andards7 is $he #%2!ian#e b" e2!%"ees4 5hen e2!%"ees are #%2!ian$ $% regu!a$i%ns se$ b"

$% ee#u$i'es7 $here is !ess #han#e % une$hi#a! beha'i%r4 T% ee#u$i'es sh%u!d su%r$ $he bes$

in$eres$s % $he #%2an" and $he in'es$%rs a!i*e and $his in'%!'es inaugura$ing benei#ia!

re!a$i%nshis 9i$h %$her indi'idua!s in $he #%2an" and ese#ia!!" e2!%"ees in 2ain$aining a

ba!an#e % e'er"%ne in$eres$s4

Promotin %ransparency

Transaren#" #an be %s$ered b" $% ee#u$i'es and #%r%ra$i%ns ha'e a !ega! and e$hi#a!

%b!iga$i%n $% #%ndu#$ $heir business 9i$h in$egri$"4 This ne#essi$a$es res%nsibi!i$" and $he

%b!iga$i%n as 9e!! as res%ur#es su#h as %!i#ies $ha$ are unda2en$a! in $he e%r$ $% re'en$ and

in$er'ene 9hen #%rru$i%n 9i$hin %rgani=a$i%n in aaren$4 ,n addi$i%n7 C%2anies #an !essen

$he ris*s br%ugh$ ab%u$ b" a !a#* % $ransaren#" b" being %en ab%u$ $heir #%r%ra$e s$ru#$ure

and b" 2a*ing basi# inan#ia! in%r2a$i%n ub!i# as 9arran$ed4 This er2i$s s$a*eh%!ders $% ha'e

an unb!e2ished er#e$i%n in regard $% $he %era$i%ns % a #%r%ra$i%n7 and 2a*es $he #%2an"


9/14


2%re a##%un$ab!e %r i$s a#$i'i$ies4 Pub!i# re%r$ing is a s$ra$egi# #%2%nen$ % $he 2easures

needed $% address #%rru$i%n and r%'ide $he $ransaren#"4

I& BP Disaster

Corporate Scandal

A$er s#anda!s su#h as Enr%n and T"#% ri%r $% $he #rea$i%n % $he Sarbanes-O!e"7 $here

9as a disas$er $ha$ i2a#$ed $he ni$ed S$a$es %r 2an" "ears $% #%2e4 The BP disas$er %##urred

a$er a gas re!ease and su##eeding e!%si%n %##urred %n $he 3ee9a$er D%ri=%n %i! rig in $he

Gu! % ei#%4 Re#%gni=ed as $he 9%rs$ %i! si!! in 4S4 his$%r"7 $his disas$er *i!!ed 11 e%!e4

nder9a$er #a2eras re'ea!ed $he BP ie 9as !ea*ing %i! and gas %n $he %#ean !%%r ab%u$ .8

2i!es % $he #%as$ % L%uisiana7 and b" $he $i2e $he 9e!! 9as #aed a$er ? da"s % se9ing

%i!7 an es$i2a$ed 6410 2i!!i%n barre!s % %i! had !ea*ed in$% $he Gu! @The O#ean P%r$a! Tea278/14 This disas$er s$i!! ae#$s s%2e indi'idua!s $% $his da" as $heir !i'e!ih%%d has ne'er been

res$%red4

Accountability

The Se#uri$ies and E#hange C%22issi%n $%da" #harged BP 9i$h 2is!eading in'es$%rs

9hi!e i$s 3ee9a$er D%ri=%n %i! rig 9as gushing in$% $he Gu! % ei#% b" signii#an$!"

unders$a$ing $he !%9 ra$e in 2u!$i!e re%r$s i!ed 9i$h $he SEC @BP $% Pa" H8 i!!i%n Pena!$"

$% Se$$!e SEC Charges % Se#uri$ies +raud 3uring 3ee9a$er D%ri=%n Oi! Si!!7 8/184

Ee#u$i'es a$ BP 2ade ub!i# s$a$e2en$s s$anding behind ear!ier #!ai2s % $he !%9 ra$e es$i2a$e

being 7/// barre!s er da" 9hen in a#$7 $heir in$erna! da$a indi#a$ed 2u#h higher es$i2a$es %

87// $% 878// barre!s % %i! er da"4 BP ne'er #%rre#$ed %r uda$ed $he 2isreresen$a$i%ns

and %2issi%ns i$ 2ade in SEC i!ings %r in'es$%rs7 %r 9hi#h $he" 9ere se'ere!" ined and

ena!i=ed4 C%r%ra$i%ns need $% be he!d a##%un$ab!e in a!! ase#$s % $heir %era$i%ns4 G%%d

#%r%ra$e #i$i=enshi and res%nsib!e #risis 2anage2en$ 2eans $ha$ a #%2an" #anI$ hide #ri$i#a!

in%r2a$i%n si2!" be#ause i$ ears $he ba#*!ash4 @BP $% Pa" H8 i!!i%n Pena!$" $% Se$$!e SEC

Charges % Se#uri$ies +raud 3uring 3ee9a$er D%ri=%n Oi! Si!!7 8/184 +ur$her2%re7 $his

disas$er has had !as$ing ee#$s %n $he en'ir%n2en$7 bu$ b" #%n#ea!ing $he se'eri$" % $he si!!7 BP


10/14

SARBANES-OXLEY ACT & CORPORATE GOVERNANCE 1/

#aused har2 $% $heir s$a*eh%!ders7 in'es$%rs7 and $he ub!i#7 a!! 9h% are r%2ised $ransaren#"7

$ru$hu!ness7 and h%nes$" r%2 a #%r%ra$i%n7 ese#ia!!" in #ri$i#a! $i2es su#h as $his disas$er4

& Corporate 'esponsibility

Competiti#e Ad#antaes

C%r%ra$e res%nsibi!i$" 9i!! resu!$ in an ad'an$age %r an" %rgani=a$i%n4 This is

e!ained in se#$i%n 6/8 % Sarbanes-O!e"4 This se#$i%n e2hasi=es #%r%ra$e res%nsibi!i$" %r

inan#ia! re%r$s and se#iies $he re#ise re;uire2en$s %r 2anagers and high ran*ing ee#u$i'es

% an %rgani=a$i%n in $he e%r$ $% #%2!" 9i$h SOX regu!a$i%ns @Sarbanes-O!e" 1/17 8/1.44

Re;uire2en$s 9ere de'e!%ed s% an" inan#ia! re%r$ d%es n%$ #%n$ain un$rue s$a$e2en$s7 %2i$$ed

a#$s7 %r s$a$e2en$s $ha$ #an be seen as 2is!eading4 5hen $he inan#ia! s$a$e2en$s % a #%2an"

are ar%ria$e7 a##ura$e7 and r%er!" reresen$ed7 in$eres$ed in'es$%rs are ab!e $% 2a*e 2%re

in$e!!igen$ in'es$ing de#isi%ns4 ,n addi$i%n7 $he ub!i#7 in'es$%rs7 and !enders are 2%re !iab!e $%

ha'e in#reased #%niden#e in $he #%r%ra$i%n7 $here%re #rea$ing a #%2e$i$i'e ad'an$age in $he

2ar*e$4

Penalties and Fines

There are ines and ena!$ies $ha$ #an be assessed $% an %rgani=a$i%n i in a#$ i$ has been

%und $ha$ an %rgani=a$i%n 9h% is %und $% ha'e 'i%!a$ed $hese !a9s #an suer se'ere ena!$ies4

The se#$i%n $ha$ addresses #ri2ina! ena!$ies %r #er$i"ing a 2is!eading %r raudu!en$ inan#ia!

re%r$ is se#$i%n 0/4 nder SOX 0/7 ena!$ies #an be u9ards % H 2i!!i%n in ines and 8/

"ears in ris%n4 This is a dire#$ e#er$ r%2 $his ar$i#u!ar se#$i%n in regard $% #ri2ina!

ena!$ies:

F5h%e'er - @1 #er$iies an" s$a$e2en$ as se$ %r$h in subse#$i%ns @a and @b %

$his se#$i%n *n%9ing $ha$ $he eri%di# re%r$ a##%2an"ing $he s$a$e2en$ d%es n%$


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#%2%r$ 9i$h a!! $he re;uire2en$s se$ %r$h in $his se#$i%n sha!! be ined n%$ 2%re

$han H17///7/// %r i2ris%ned n%$ 2%re $han 1/ "ears7 %r b%$h> %r @8 9i!!u!!"

#er$iies an" s$a$e2en$ as se$ %r$h in subse#$i%ns @a and @b % $his se#$i%n

*n%9ing $ha$ $he eri%di# re%r$ a##%2an"ing $he s$a$e2en$ d%es n%$ #%2%r$

9i$h a!! $he re;uire2en$s se$ %r$h in $his se#$i%n sha!! be ined n%$ 2%re $han

H7///7///7 %r i2ris%ned n%$ 2%re $han 8/ "ears7 %r b%$h @Sarbanes-O!e" 1/17

8/1.4

The ena!$ies $ha$ #an be en%r#ed %n an indi'idua! %r a #%r%ra$i%n are indeed se'ere7 and 9i!!

assis$ in $he de$erren$ % #ri2ina!7 raudu!en$7 and une$hi#a! beha'i%r4

,n #%n#!usi%n7 $he Sarbanes-O!e" A#$ #%n$ains regu!a$i%ns $ha$ in#rease $he !e'e! %

a##%un$abi!i$" %r inan#ia! s$a$e2en$s4 ,n addi$i%n7 $his A#$ deines $he ena!$" %r raud7 2a*es

ee#u$i'es in a #%r%ra$i%n res%nsib!e %r inan#ia! dis#!%sures and $his inan#ia! re%r$ing %

$heir #%r%ra$i%n is $ru$hu!4 Audi$%rs are re;uired $% r%'ide u!! a##%un$s $% audi$ #%22i$$ees in

regard $% a##%un$ing %!i#ies and ra#$i#es4 The d%#u2en$a$i%n re;uired under $he Sarbanes-

O!e" A#$ %r#es $he ne#essi$" %r ee#u$i'es $% d%#u2en$ $he in$erna! #%n$r%! en'ir%n2en$ %

$heir #%2an"7 bu$ $% #%nir2 $ha$ $he #%n$r%!s are 9%r*ing ee#$i'e!" in %rder $% ensure an"

business ris*s are being r%er!" 2ini2i=ed4 C%2anies ha'e a res%nsibi!i$" $% $heir

shareh%!ders and $he ub!i# as 9e!! as $heir e2!%"ees $% be $ransaren$ in ase#$s % #%r%ra$e

g%'ernan#e4 Las$!"7 $his A#$ 9as designed $% be$$er r%$e#$ in'es$%rs and shareh%!ders as 9e!! as

$% in#rease $heir #%niden#e in ub!i# #%r%ra$i%ns b" $he s$reng$hening % in$erna! #%n$r%! and

#%r%ra$e g%'ernan#e4


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Reeren#es

BP to Pay $525 Million Penalty to Settle SEC Charges of Securities Fraud During Deepwater

Horion !il Spill 4 @8/187 N%'e2ber 14 Re$rie'ed ar#h 167 8/17 r%2 SEC4g%':

h$$s:JJ9994se#4g%'JNe9sJPressRe!easeJ3e$ai!JPressRe!easeJ1611.?08

Brigha27 E4 +4 @8/14 "nter#ediate financial #anage#ent 4 Re$rie'ed ar#h 167 8/17 r%2

h$$s:JJe'eres$4'i$a!s%ur#e4#%2JKJb%%*sJ0?1166/??/6J#iJ/

3ra=7 34 @8/117 ar#h 8?4 Fraud preention% "#proing internal controls4 Re$rie'ed ar#h 167

8/17 r%2 CSO On!ine4#%2: h$$:JJ9994#s%%n!ine4#%2Jar$i#!eJ81801Jraud-

re'en$i%nJraud-re'en$i%n--i2r%'ing-in$erna!-#%n$r%!s4h$2!


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Dess7 34 @8//4 A BS,NESS ETD,CS PERSPECT,VE ON SARBANES-OXLEY AN3 TDE

ORGAN,AT,ONAL SENTENC,NG G,3EL,NES4 Michigan &aw 'eiew( )*5@?7

1?1-1?14 Re$rie'ed ar#h 17 8/17 r%2

h$$:JJ9eb4b4ebs#%h%s$4#%2Jeh%s$Jde$ai!Jde$ai!M'id1/&sid#dd?d-008a

"#proing Business Behaiour% +hy we need Corporate ,oernance4 @8/14 Re$rie'ed ar#h

167 8/17 r%2 OEC34%rg:

h$$:JJ9994%e#d4%rgJdaJ#aJ#%r%ra$eg%'ernan#erin#i!esJi2r%'ingbusinessbeha'i%ur

9h"9eneed#%r%ra$eg%'ernan#e4h$2

R%senbau27 E4 @8/1/7 )une 884 BP( Big !il% Meet Sar-anes.!/ley Section 0*24 Re$rie'ed

ar#h 167 8/17 r%2 The S$ree$4#%2: h$$:JJ9994$hes$ree$4#%2Js$%r"J1/??8?J1Jb-

big-%i!-2ee$-sarbanes-%!e"-se#$i%n-6/84h$2!

Sar-anes.!/ley )*)4 @8/1.4 Re$rie'ed )u!" 867 8/1.7 r%2 Sarbanes O!e" A#$ 1/1:

h$$:JJ9994sarbanes-%!e"-1/14#%2J

Si2%n7 34 R4 @8//07 3e#e2ber4 Corporate 1ccounta-ility% 1 Su##ary of the Sar-anes.!/ley

1ct 4 Re$rie'ed ar#h 167 8/17 r%2 Lega! %%24#%2:

h$$s:JJ9994!ega!=%%24#%2Jar$i#!esJ#%r%ra$e-a##%un$abi!i$"-a-su22ar"-%-$he-

sarbanes-%!e"-a#$

TDE GOO37 TDE BA37 AN3 TDE,R CORPORATE CO3ES O+ ETD,CS: ENRON7

SARBANES-OXLEY7 AN3 TDE PROBLES 5,TD LEG,SLAT,NG GOO3

BEDAV,OR4 @8//64 Harard &aw 'eiew( )) @7 81864 Re$rie'ed ar#h 167 8/17

r%2 h$$:JJ9eb4b4ebs#%h%s$4#%2Jeh%s$Jd'ie9erJd'ie9erMsid??1/?e8-/e/?-.8#a-

?.8-b#..d.1ae../sessi%n2gr10?&'id1&hid1/8


14/14

SARBANES-OXLEY ACT & CORPORATE GOVERNANCE 1.

The O#ean P%r$a! Tea2 4 @8/14 ,ulf !il Spill 4 Re$rie'ed ar#h 167 8/17 r%2 O#ean P%r$a!:

h$$:JJ%#ean4si4eduJgu!-%i!-si!!

FIN 6409 - Financial Management - Loraine J Jackson - Course Project - Week Three

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Transcript of FIN 6409 - Financial Management - Loraine J Jackson - Course Project - Week Three