Implication of the Sarbanes-Oxley Act of 2002 to New Zealands Corporate Governance - Research Paper Example

Download file to see previous pages SOX was implemented as a result of the need to stop further corporate governance failure, coupled with the attempt to obtain more control over company directors who are charged with the duty to monitor management practices within their organizations. As was evident at Enron and WorldCom, the boards of directors failed in their duties of competent management and supervision, and they also failed to put in place other important supervision institutions .

Sarbanes-Oxley has also introduced a new dimension in dealing with corporate codes of conduct by strengthening ethics programs in corporate settings. It has generally been observed that the SOX Act has enhanced transparency within organizations, a key indicator being an increase in corporate membership by the year 2003, just a year after the Act came into practice. Many authors such as Rothwell (cited above) and Groff and Thomas have noted that the SOX Act will generally increase accountability in organizations. As noted by Rothwell, “A key effect of the Act is to increase board accountability in business operations. And of course, finding qualified successors for CEO and for others on down the organization chart is an important issue that corporate boards must perennially address.”

Groff and Thomas support this by noting that good management schedules depend on both business processes and technology. Additionally, smart planning and purchasing decisions often lead to transparent systems that add sufficient answerability to end the tendencies of massive corporate scandals. Moreover, the presence of stricter regulations such as the SOX Act provides a good opportunity for companies to pursue integration, data integrity, and general security improvements. It is therefore inarguable that enterprises that implement effective content management, as well as workflow systems, are better placed to win the credibility that is likely to be gained from adopting the reforms that emphasize transparency and accountability.

According to Jickling, the Sarbanes-Oxley Act of 2002 came as a remedy to weaknesses in accounting and corporate governance as it has been mentioned of the two firms that collapsed due to fraud above. ...Download file to see next pages Read More