Public
Policy Analysis
12/10/09
Table
of Content
I. Introduction………………………………………………………………………......
3
II. History……………………………………………………………………………...…4
III. Description
of the Law……………………………………………………………......4
IV. Ethical
Issues.......................…………………………………………………………..8
V. Analysis
of policy effectiveness……………………………………………………..10
VI. Implementation………………………………………………………………………10
VII.
Evaluation……………………………………………………………………………12
VIII. Recommendation…………………………………………………………………….14
IX. Conclusion……………………………………………………...……………………15
Introduction
Imagine
a world, where no major corporate or business linked problems have occurred.
Where people trust and are happy with corporate America; where a household
average income was more than fifty thousand dollars. Between 1992 and 2000, the
percentage of households owning mutual funds doubled, from 24.4 to 49 percent.
And between 1992 and 1999, the percentage of Americans owning equities, either
through mutual funds or as individual stocks, rose from 36.7 percent to 47.9
percent (Gross 2009). Then in December 2, 2001, a date that will live in
infamy, Enron Corp. files for chapter 11 bankruptcy, and is accounted for
$63.4
billion in assets, and is held as one of the largest U.S. bankruptcies in
history. Only months before Enron Corp.’s bankruptcy, the firm was widely
regarded as one of the most innovative, fastest growing, and best managed
businesses in the United States. Following Enron came many cases of corporations
who performed fraudulent activities and lied on their financial statements,
like WorldCom, Adelphia, and many others. The fall of these major corporations
cost the economy and people billions of dollars. To answer the call for help,
the government came out with the 'Public Company Accounting Reform and Investor
Protection Act, also known as Sarbanes and Oxley Act or SOX.
In
this paper, there will be description of the law, from history to the current
situation of it. Then it shall continue with the ethical issues of what had
occured and the reason for its creation. Following with the analysis of
policy’s effectiveness, basically what and how has it achieved in corporate
America. The implementation of SOX, meaning who or what executes and monitors
the law in other firms. Then the evaluation of the law, where the strengths and
weaknesses will be revealed, following with recommendations to enhance the
law. Finally, ending with a conclusion
of what was said and my opinions on this paper.
History
After
being fed up with all the corporate scandals, Senator Paul Sarbanes and Representative
Michael Oxley prepared their own bills to answer the corporate fraud that had
occurred in America. On June 18, 2002, Senator Paul Sarbanes’ bill passed the
Senate Banking Committee by a vote of 17 to 4. He introduced the Senate Bill 2673 at the end
of June and it was passed on July 15, 2002, 97-0. Michael Oxley’s bill,
Corporate and Auditing Accountability, Responsibility, and Transparency Act, was
passed on April 24, 2002 by a vote of 334 to 90. Later, the house and the
senate joined together and formed a conference committee to bring together the
differences between Senator Sarbanes’ and Representative Oxley’s bills. The
conference committee relied heavily on Senate bill 2673 and stated “most
changes made by the conference committee strengthened the prescriptions of S.
2673 or added new prescriptions” (The Sarbanes Oxley Deskbook, Bostelman). On
July 24, 2002, the committee approved the final conference bill and provided it
with the name of “The Sarbanes-Oxley Act of 2002.” The very next day after it
was approved, Congress voted on it and produced an overwhelming victory of 423
to 3 in the House and 99 to 0 in the Senate. Former President George W. Bush
signed the bill into a law on July 30, 2002.
