Regulatory Measures involving 1984 Sentencing Reform Act

Regulatory Measures
Events that led to implementation of various regulatory measures
The implementation of the 1984 Sentencing Reform Act called for the establishment of Federal Sentencing Guidelines for Organizations (FSGO). The United States Sentencing Commission decided to come up with these guidelines targeted at individuals and firms. The key aim was crime prevention and decreasing disparities in sentencing. (Mercer, 2003). At first, in the year 1991, the idea of organizational punishment mitigation was introduced, for cooperation and effective adherence to the program.
The 2002 federal regulation, SOX (Sarbanes-Oxley Act), put extensive financial and auditing related regulations in place for publicly-traded organizations. The chief goal was regulation of corporate practices like financial reporting at such corporations.
The Consumer Financial Protection Bureau (CFPB), instituted as part of the 2010 Consumer Protection Act and the Dodd-Frank Wall Street Reform, is responsible for the oversight of federal financial regulations expressly protecting consumers (i.e., individuals who store the money they own in credit unions and banks, use credit cards for purchasing services and goods, and purchase homes on loan) (Mercer, 2003).
The 1977 FCPA (Foreign Corrupt Practices Act) was implemented to forbid specific classes of individuals and groups from paying foreign governmental authorities to facilitate business acquisition or retention (Martin, Aaron Klein, & Justin Schardin, 2017).
The impact of these laws on business ethics
The FSGO, SOX, FCPA and CFPB have all had a range of impacts when it comes to business ethics, such as:
a) Establishment of suitable procedures and standards for preventing and identifying issues.
b) Establishment of program supervision on the part of board members and other senior managers.
c) Demonstration of due diligence when it comes to persons to whom considerable discretionary power (with regard to the program) may be delegated.
d) Establishment of sound training and communications.
e) Establishment of an initiative for sound supervision, auditing and assessment of ethics and adherence, in addition to a well-publicized whistleblower hotline, incorporating procedures facilitating confidentiality or anonymity, by which the firm’s agents and employees can report or look for guidance with regard to actual or likely problems without expecting retaliation on the part of the organization.
f) Promotion and enforcement of the ethics and conformity initiative consistently all through the firm, via suitable disciplinary measures and incentives, for committing transgressions as well as not taking reasonable steps for transgression prevention or identification (Orin, 2008).
g) Adoption of reasonable steps for correctly responding to transgressions identified as well as prevention of similar behaviors in the future; this includes effecting required changes in the ethics and adherence initiative. It also encompasses a routine risk evaluation, followed by making changes to the ethics and conformity initiative, as required.
Summary of an article
Mercer, W. (2003). Assessing Compliance with the U.S. Sentencing Guidelines: The Significance of Improved Data Collection and Reporting. Federal Sentencing Reporter, 16(1), 43-51.
According to this article, following years of dispute on the subject of the significance of organizational ethics, federal authorities have decided upon institutionalizing ethics in the form of a buffer for preventing companies from engaging in legal violations. The article delineates basic FSG requirements, besides recommending actions to be adopted by managers for improving conformity to ethics. A sound compliance initiative is more of a commitment as compared to an organization conduct-related blueprint. The organization must cultivate a corporate climate promoting decreased wrongdoings. FSG compliance adoption can significantly decrease corporate penalties if due diligence is observed for preventing transgressions. Federal courts ascertain FSG initiative efficacy following a violation incident.
Effects of regulatory measures on the organization
Helps understand the need for the initiative and ensures personnel commitment
Adoption of a sound adherence eLearning initiative constitutes a preventive step against misdemeanor, besides demonstrating organizational dedication to supporting ethical conduct. But all initiatives aren’t created equally, and those resembling 'window dressing' will likely not be adhered to by the workforce, possibly leading to issues if a claim or lawsuit is made against the firm.
Establishment of the right tone on the part of top-level managers
Sincere engagement of senior managers in the ethics and conformity training initiative greatly improves chances of its acceptance by the workforce, which will start recognizing it as a key element of organizational culture.
Being demanding and investing in quality
Frequently, the sole workforce exposure to organizational legal department efforts is the adoption of a company-wide ethics and conformity training initiative. Thus, initiative quality and the technology behind it directly impacts personnel view of the company’s dedication (or lack of it), to ethics and conformity. Elementary click-to-read eLearning initiatives or PowerPoint presentations suggest that ethics and conformity is not taken seriously by the company (Read, 2018).
Respect personnel time
Clever eLearning initiatives effectively balance relevance of the subject with initiative completion time. Failure to do so might cause the workforce to resent overly lengthy programs which take up precious time which could otherwise be dedicated to fulfilling primary obligations, or could end up lowering understanding and retention rates (on account of uninteresting or irrelevant content).
Demand for vendors to disclose every likely conflict of interest
Directorial boards are increasingly recognizing the significance of ensuring corporate operations reflect just, ethical transactions always. Hence, managers need to ensure external advisors who recommend corporate solutions don’t have any conflict of interest, for avoiding embarrassment or aggravation at a later date.
Learning from others’ experiences, open standards, and best practices
Traditionally, the implementation of sound eLearning conformity initiatives has always proven tricky, owing to their need to effectively merge regulations with corporate technology, training approach and culture. Fortunately, industrial pioneers readily share personal insights and experiences when it comes to best practices.
References
Martin Neil Baily, Aaron Klein, & Justin Schardin. (2017). The Impact of the Dodd-Frank Act on Financial Stability and Economic Growth. RSF: The Russell Sage Foundation Journal of the Social Sciences, 3(1), 20.
Mercer, W. (2003). Assessing Compliance with the U.S. Sentencing Guidelines: The Significance of Improved Data Collection and Reporting. Federal Sentencing Reporter, 16(1), 43-51.
Orin, R. M. (2008). Ethical Guidance and Constraint Under the Sarbanes-Oxley Act of 2002. Journal of Accounting, Auditing & Finance, 23(1), 141-171.
Read, K. (2018, October 24). The Federal Sentencing Guidelines for Organizations (FSGO): Compliance and Ethics Program Ideas & Innovation | Convercent. Retrieved from https://www.convercent.com/blog/the-federal-sentencing-guidelines-for-organizations-fsgo-compliance-and-ethics-program-ideas-innovation