BUSINESS LAW: TEXT & EXERCISES (MINDTAP COURSE LIST)

II. Setting the Right Ethical Tone a. Ethical Leadership: Having ethical leadership is likely to lead to employees acting ethically themselves. b. Ethical Codes of Conduct: one of the most effective ways of setting the tone of ethical behavior is to create an ethical code of conduct. c. Corporate Compliance Programs: in large corporations other components of an ethics program include an ethics committee, ethical training programs, and internal audits. d. Conflicts and Trade-offs: The duties of many groups (shareholders and employees) may conflict causing management to face ethical issues. III. Sarbanes-Oxley Act a. Public Company Accounting Oversight Board- i. Oversees the audit of companies, or issuers, whose securities are sold to public investors in order to protect the interest of investors and the public ii. To register public accounting firms that prepare audit reports for issuers b. Enforcement and Penalties- i. Board can inspect registered public accounting firms ii. Investigate firms that violate the act iii. Discipline those firms by imposing sanctions ranging from temporary or permanent suspensions to civil penalties up to $15 million. iv. The Act also prohibits falsifying or destroying records with the intent to obstruct or influence a federal investigation- violations may result in a fine and imprisonment for up to 20 years IV. Business Ethics and the Law a. Moral minimum- minimum acceptable standard for ethical business behavior (simply obeying the law). b. Laws Regulating Business- most business firms are subject to extensive government regulation- from hiring and firing personnel to selling products in the marketplace. c. Gray Areas in the Law- while legality of a decision is usually relatively clear, the ethical position is somewhat grayer. Business should be prepared to defend their actions.