The Sarbanes-Oxley Act was signed into law on July 30, 2002 and has led to vast changes in the accounting profession, although not necessarily in corporate ethics.
A recent survey by Deloitte found that more than half of C-suite and other executives said global corporate ethical behavior has improved since the enactment of SOX. However, only 41.3 percent of executives said their organizations’ global ethics cultures are strong.
The 900 executives polled by Deloitte believe that despite regulations, employees are continuing to struggle with ethics compliance due to inconsistency of clear, concise and frequent ethics program communications and training for all employees (28.5 percent); lack of incentives and repercussions around ethical and unethical behavior (16.3 percent); varied ethical postures of third parties with whom employees regularly interact (14.8 percent) and differing ethical standards for various employee groups (12.5 percent).
“One of the main findings, and no surprise, was that well over half the respondents felt that since the passage of the Sarbanes-Oxley Act, there’s been an increase in awareness dealing with unethical behavior, an improvement in the process, and an improvement in the awareness that third parties have in the importance of propagating ethical behavior,” said Deloitte Risk and Financial Advisory principal and U.S. Forensic leader Don Fancher.
“At the same time there’s still more that needs to be done. Way less than half the respondents are actively measuring and monitoring their programs, with things such as employee hotlines. They’re performing training, but they’re not actively assessing the results of those efforts. I think there’s significant need for companies to do more to modernize their compliance process, use technology and continually seek to improve on their processes and mitigate risk as aggressively as they can.”
Still, he believes Sarbanes-Oxley has helped in many ways with corporate governance.
“There has definitely been an increase in awareness and controls,” said Fancher. “Certainly Sarbanes-Oxley was a key contributor to that. There have been other contributing forces as well.” He pointed to how the U.S. has become a leader in regulatory activity dealing with financial crime and unethical behavior, influencing other governments to become more aggressive at uncovering financial crimes.
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