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SARBANES-OXLEY ACT AND PROMOTING GOOD BUSINESS ETHICS

IN REFLECTING ON THE CREATION OF THE SARBANES-OXLEY ACT TO INCREASE ACCOUNTABIITY THROUGH NEW MANDATORY STANDARDS, WHAT ARE SOME POSSIBLE EXPLANATIONS AS TO WHY UNETHICAL CONDUCT OCCURS IN FINANCIAL MANAGEMENT? The Sarbanes-Oxley Act of 2002 was directly related to the financial scandals of Enron, Tyco, and WorldCom. It is a long list but the main parts of the act are Section 302 A mandate requires senior management to certify the accuracy of the reported financial statement and Section 404 a requirement that management and auditors establish internal controls and reporting methods of the adequacy of those controls (Sarbanes-Oxley Act of 2002 - SOX, 2013). Some possible explanations why people act unethically can be explained from a psychological standpoint. There are psychological traps that people fall in to. One such trap is Obedience to Authority this is when a person follows the orders of their boss even if it is unethical. It stems from childhood when we are trained to do as our parents tell us and then as students do as their professors tell them. This carries over into the work place as well. The second trap is Need for Closure which is influenced by situational factors. People who have a high need for closure are those with the personality trait of I make decisions quickly and confidently or Its annoying listening to someone who cant make up their mind. This personality is setting themselves up to make hasty decisions that will cost them in the future. The third trap is False Consensus Effect which is simply Well, so and so did it, so I can too. If I dont take this paper and printer than someone else will and The boss does it so it must be okay (Hoyk, 2009). The suggestion offered are to have a psychologist on hand to help coworkers contend and recognize these traits in order to control them. If people are more aware of this type of personality within themselves, they are more likely to face the situation differently when that particular situation arises (Hoyk, 2009). WHAT ARE SOME ACTIVITIES CORPORATIONS CAN DO TO DECREASE OVERALL UNETHICAL PRACTICES AND PROMOTE GOOD BUSINESS ETHICS IN THE ORGANZATION? There are ways to prevent unethical behavior and ways to enforce unethical behaviors. To prevent unethical behaviors:

SARBANES-OXLEY ACT AND PROMOTING GOOD BUSINESS ETHICS

Create a code of conduct Lead by example Reinforce consequences Show employees appreciation Welcome an ethics speaker Create checks and balances Hire for values (Brookins, 2013). Ways to enforce unethical behavior include: 1. Post clear guidelines and make each employee sign and acknowledge those guidelines 2. Outline potential punishments for unethical behavior 3. Enact a reward system that promotes ethical behavior 4. Ensure privacy for whistleblowers 5. Create an ethics panel (as discussed above) 6. Create a position especially for this type of situation 7. Punish workers who violate the ethics and set the example. (Mack).

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References
Brookins, M. (2013). Ways to Prevent Unethical Behavior in the Workplace. Retrieved from Small Business Chron Web site: http://smallbusiness.chron.com/ways-to-prevent-unethical-behavior-workplace-21344.html Hoyk, R. (2009). The Root Causes of Unethical Behavior. Retrieved from Perpperdine University Web site : http://gbr.pepperdine.edu/2010/08/the-root-cause-of-unethical-behavior/ Mack, S. (n.d.). How to Enforce Ethical Behavior in the Workplace. Retrieved from Small Business Chron Web site: http://smallbusiness.chron.com/enforce-ethical-behavior-workplace-20234.html Sarbanes-Oxley Act of 2002 - SOX. (2013). Retrieved from Investopedia Web site: http://www.investopedia/com/terms/s/sarbanesoxleyact.asp