The Securities and Exchange Commission was created in 1934 to police the U. S. financial markets. Today, the Securities and Exchange Commission continues to create legislation tightening reporting standards and providing more transparency. Unfortunately, increasing standards often comes after a failure of the system. The Sarbanes-Oxley Act of 2002 is a primary example of legislation following financial market failure. Sarbanes-Oxley influenced public businesses through transformation of the financial system.
The July 2002 enactment of the Sarbanes Oxley Act, co-authored by U. S. Sen. Paul Sarbanes of Maryland and U. S. Rep. Michael Oxley of Ohio, followed a series of large public company failures that included Enron, Tyco and WorldCom. Sarbanes-Oxley addressed investor confidence and fraud through reform of the public company reporting standards. However, much damage in the market occurred with the collapse of several major companies between 2002 and 2004. (smallbusiness. chron. com). The impact of unethical behavior is known by many companies, and have done damage to individuals, and businesses as well. The results of unethical behavior on a large scale would be the Enron, Tyco, and Global Crossing, or WorldCom.
Greediness led to accounting unethical promises, and with that certain individuals became the ones who had told on their companies. Falsifying financial reports is dishonest and unethical because the financial records are supposed to show financial results of a business, and how it is growing. When accountants or managers lie about the revenue and cash flow it misleads prospective investors, stockholders, employees, and the U. S. government. So many billions of dollars have been hidden in the paperwork, and financial statements.
If I had found inconsistencies in the financial statements where I worked I would have to go through the chain of command to let them know of what I have found and if there was nothing done then I would then think about going outside to tell someone so I could cover myself. Unethical behavior led to the end of Enron, and the other companies, and to financial issues for many individuals all over the United States. As a result of the unethical behavior of several companies there is now the Sarbanes-Oxley Act. All companies, must comply with the Sarbanes Oxley Act of 2002. The Sarbanes-Oxley Act set guidelines for ethical accounting practices.