Fiduciary Responsibility - Research Paper Example

It reveals how the board can busy themselves with governing its corporate, financial planning by controlling budget values and not the budget members. In addressing the thesis statement of comparing and contrasting Corporate Fiduciary Responsibility and Sarbanes-Oxley Compliance, we will draw attention to the significant of the two concepts. Sarbanes-Oxley Compliance Verse Corporate Fiduciary Responsibility Holt (2008) indicates that the Sarbanes –Oxley is based on the legislative and administrative, whereas corporate fiduciary responsibility, although, based on the statutory, it is established from the equity and is created by judges.

According to Kieff and Paredes (2010), the corporate fiduciary responsibility under the state law practices has fluid standards and duties based approach. Whereas Sarbanes –Oxley adopt a rule based approach to corporate governance. According to Hopkins (2011), fiduciary responsibility requires board members of exempt corporate to be objective and should act for its excellent and betterment, rather than for their personal benefit. Sarbanes –Oxley indiscriminately imposes significant compliance cost on the corporate due to the inflexible rules that are applied to corporate regardless of the situation.

According to Kieff and Paredes (2010), fiduciary relationship arises in the context of complex and constantly evolving long-term arrangements. Thus, do not provide themselves with easy, clear line rules or detailed regulations. However, Sarbanes –Oxley does not involve the complexities of the corporate environment. It deals with setting wide standards and allowing corporate a chance in determining how best to comply with those standards. The occurrence of corporate misconduct provides essential insights about the manner that board members demonstrate compliances with their fiduciary responsibility.

Kieff and Paredes (2010) indicate that trustee responsibility is limited in that the fiduciary who agrees to take control of plan assets may appoint an investment manager. If the investment manager is appointed, the trustee is not accountable for that the investment manager’s acts. Meanwhile, he or she is not under any obligation to invest or to manage any plan asset that is subject to the management of the investment manager. Moreover, a plan may expressly provide that the trustee is subject to follow the ways of listed party who is not a trustee.

According to Kieff and Paredes (2010), a trustee is subject to proper directions of that named fiduciary. Since this duty does not relieve the trustee from determining whether the direction of the named fiduciary is prudent, it does not considerably limit a trustee’s responsibility. In additional, where plan assets are detained by more than one trustee, trustee is only accountable for an act of a trustee own trust. Meanwhile, co trustees may agree to allocate responsibilities, obligations and duties among themselves in case such agreement is authorized by the trust instrument.

According to Kieff and Paredes (2010), a trustee will not be accountable for a loss to the plan arising from the acts of another trustee to whom responsibility has been allocated. However, in the Sarbanes –Oxley the corporate are seeking to reduce the cost of ongoing compliance while maximizing benefits (Holt, 2008). Meanwhile, the act does not authorize corporate to change audit firms periodically, but recommends essential