In 2008, several high-profile fraud cases dominated the headlines. The Securities and Exchange Commission (SEC) was thrown into the spotlight for failing to recognize fraudulent conduct by the businesses it was tasked with monitoring. This brought to light the problems that exist with detecting fraudulent conduct by companies.
Now, as part of an initiative by your company (an accounting firm) to be mindful of ethical issues in the accounting workplace, your company has scheduled a series of meetings to revisit the topic of ethical issues in the workplace. You have been asked to speak at the next company meeting about corporate fraud, the Sarbanes-Oxley Act of 2002 (SOX), and the role of the SEC in monitoring business activities.
Corporate fraud has become a huge issue in American society. Corporate fraud hurts everyone. Several laws have been brought forward by the government to control this epidemic problem.
Discuss the following questions:
How is corporate fraud detected?
What is the role of the SEC in monitoring business activities?
What is the Sarbanes-Oxley Act of 2002, and do you think it is effective given the cost of compliance?
If Tom, a high-power executive, is charged with fraud by the SEC, what civil and criminal penalties could he face?
What danger does corporate fraud pose to the community? How much damage does corporate fraud do to the perpetrators and the victims in terms of their personal lives and their families? What penalties do you think should be assessed to the perpetrators?