Sarbanes Oxley Act and Problems with Compliance

The Sarbanes-Oxley Act: Compliance Hazards and Ethical Dilemmas

The critical components of compliance with the Sarbanes-Oxley Act include the acknowledgement of responsibility by CEOs and CFOs for all financial reports, the issuance of regular internal control reports by the publicly-traded organizations that must abide by the Act, data security compliance with appropriate controls, and documentation of compliance (“What is SOX Compliance,” 2019). One significant compliance hazard which has emerged in the era of COVID-19, however, is the difficulty of instituting timely financial reports, given the delays, increased uncertainty, and heightened risk in the volatile international environment where outbreaks and lockdowns still continue to abound (Christensen, 2019). There may be an ethical dilemma between protecting employees from being exposed via social distancing and the ethics of compliance with reporting.

SOX likewise requires careful monitoring of sensitive data controls, to minimize the risk of identity fraud (Cryer, 2019). Yet many companies have been sluggish in bringing data breaches to light. This may be the result of a conflict in the responsibility owed to the victims of the breach (such as employees or customers) and the desire of the company to minimize the effects of such a breach to ensure there is less of an impact for shareholders, given the ethical demand for the firm to earn a profit for its shareholders.