This paper examines the ethical dimensions of the Sarbanes-Oxley Act of 2002, drawing primarily on Orin's (2008) analysis of the Act's guidance and constraints. It reviews what the Act accomplishes — including mandatory auditor rotation, pension protections, and required publication of corporate codes of ethics — while arguing that these measures do not go far enough. The paper discusses the corporate scandals, most notably Enron's collapse, that prompted the legislation, and explores lingering weaknesses such as limited auditor firm rotation, the absence of prescribed code-of-ethics content, and insufficient accountability mechanisms. The discussion concludes by noting that the Act may still be in a trial-and-error period, with amendments possible if future corporate failures reveal ongoing inadequacies.
The paper demonstrates source-anchored critical analysis: it introduces a central scholarly argument (Orin's claim that the Act did not go far enough), uses additional peer-reviewed citations to support or contextualize that claim, and applies the combined framework to evaluate specific provisions of the law. This technique shows how to move beyond description toward evidence-based critique.
The paper opens by introducing the Act and its general purpose, then pivots to the corporate context that necessitated it. Subsequent paragraphs address specific provisions — auditor rotation, pension protections, and ethics codes — evaluating each against the standard of adequate investor and employee protection. The paper closes by considering the Act's uncertain legislative future, giving the argument a forward-looking conclusion. This progression from context → provisions → critique → outlook is a reliable structure for policy-analysis essays.
The article "Ethical Guidance and Constraints under the Sarbanes-Oxley Act of 2002" by R. M. Orin (2008) espouses the belief that the Sarbanes-Oxley Act did not go far enough in its effort to stop unethical financial practices by businesses. The article addresses what the Act actually does, which is to help companies practice more due diligence and lessen the chances of engaging in unethical financial practices. The Sarbanes-Oxley Act involves important legal issues. Due diligence is one of those issues, but another is the requirement for accountants and lawyers to report the corporations they work with for wrongdoing if they see or suspect a serious financial issue (Coffee, 2002). This has been a concern for some because it technically compromises attorney-client privilege. This was deemed necessary, however, in the face of all the corporate scandals that came to light (Koehn & Del Vecchio, 2004). If those scandals had not been so serious and far-reaching for such a large number of people, the issues addressed by the Act may not have been nearly as significant and may not have left such a lasting impression on the financial world.
Even though the Act was written quickly, it was designed to protect as many people as possible. For example, the pension plans of employees who work for companies that collapse — in the way that Enron did — are now protected. The reason the issue was so devastating for Enron employees is that all of the money contributed to the pension fund was used to purchase stock in the company. When the company collapsed and the stock price plummeted, there was no money left to pay out pensions because the stock was worthless (Koehn & Del Vecchio, 2004). That was a serious problem that left a large number of people financially devastated. They had expected to retire comfortably, but because of what Enron did, that was no longer possible.
The problem was not limited to Enron's collapse. The large number of companies that collapsed or were damaged beyond repair due to shady financial dealings was what ultimately prompted the Act to be put into place. The people who suffered and lost their pensions were at least able, through that suffering, to help others avoid a similar fate — though that may be small consolation on a financial level.
Despite all of the things that the Act addresses, it does not go as far as it could in protecting individuals from unscrupulous companies and their faulty accounting practices. Currently, the Act calls for mandatory auditor rotation — but only for the lead auditor at the firm. All other auditors who normally work with the company may remain the same, and that is something Orin (2008) believes should be changed. Orin (2008) goes so far as to argue that entire audit firms should be rotated, in order to avoid many of the problems that appeared in the past. The public accountant is supposed to remain independent, and that is very difficult to achieve when a particular firm — and a specific accountant or group of accountants — consistently handles the same company's tax filings and other accounting matters. This arrangement can lead to dishonesty and unethical practices in some cases, causing damage to the accounting firm, the company, and that company's stockholders and employees, many of whom never saw it coming.
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