Key concepts
- Foreign Corrupt Practices Act (FCPA)
- U.S Federal Sentencing Guidelines for Organizations
- The Sarbanes-Oxley Act
- Revised Federal Sentencing Guidelines for Organizations
- Dodd-Frank Wall Street Reform and Consumer Protection Act
Summary
In chapter 6, we learn many key concepts, which underline the role of government and how they tie into shaping ethical practices to ensure organizations and businesses do not use illegal conduct. There are 5 key pieces of U.S legislation that are designed to discourage, and prevent illegal conduct within organizations.
The first key legislation is the Foreign Corrupt Practices Act (FCPA), which was established in 1977. The main purpose was to control bribery to foreign officials and politicians. The passing of the act sent a deliberate message that the competitiveness of United States companies in overseas markets are going to be more based on products and prices rather then the extent of bribery that takes place with foreign officials and political leaders in order to keep quiet about things like sweat shops. The act requires the full disclosure of all transactions with foreign officials and politicians. The FCPA also works with the Bank Secrecy Act and the Mail Fraud Act, which prevent any funds from going overseas in a fraudulent manner.
The second key piece is the U.S Federal Sentencing Guidelines for Organizations established in 1991, which applies to organizations and holds them liable for any criminal acts regarding their employees and or agents. The act requires that organizations monitor themselves by preventing and protecting any criminal activities that their employees or agents may be performing. Its main mission is to promote ethical behavior and increase the cost or punishments of any unethical behavior. There is a three-step guideline for the fines that are given out by the FSGO. Step one is the determination of the “base fine” in which the monetary gain of the offence would be the fine or the monetary loss caused by the organization would be the fine. There are different levels to each fine and things like evidence of pre planning calculate levels. The second step is “the culpability score” in which once the base fine has been determined the judge will add a corresponding degree of blame, which is a multiplier of the base fine, the greatest multiplier possible is 4. The last step is determining the total fine amount in which all steps are calculated and the fine is given out
Third key act is The Sarbanes-Oxley Act (2002), which became law on July 30th 2003. The Sarbanes-Oxley Act is a legislative reaction to corporate accounting scandals of the early 2000s. The act covers the financial medium of businesses. They do this through companies, such as the public company accounting over site board, which over sites body for auditing companies.
The fourth key point to prevent any legal conduct within organizations is the Revised Federal Sentencing Guidelines for Organizations which was established in may 2004. The guidelines adopted three key changes from the 1991 guidelines. The first change was the requirement of companies to evaluate exactly how effective their compliance programs are. This was made on the assumption that any program was capable of failing. The second revised guideline is the required evidence that companies are promoting ethical behavior, and the last revised guideline is making accountability a lot more defined. Any officials are expected to be knowledgeable on their programs and are required to receive training. This makes accountability a lot more known within the company and shows the employees that the company is in turn practicing ethical behavior and any unethical practices will not be tolerated.
The last Act is the Dodd-Frank Wall Street Reform and Consumer Protection Act, which legislation was put into place that promoted a fix for miss management of risk in any financial sector that in turn led to a global financial crisis from 2008-2010. A key provision of this act is the consumer financial protection bureau, in which a government agency overseas financial products and services. Another key provision is the financial stability oversight council in which a government agency prevents the failure of banks, which will in turn affect the growth of the economy.
These acts will ensure that all companies are making the correct ethical choices when running their business and ensures the public that companies are doing the right thing.
The first key legislation is the Foreign Corrupt Practices Act (FCPA), which was established in 1977. The main purpose was to control bribery to foreign officials and politicians. The passing of the act sent a deliberate message that the competitiveness of United States companies in overseas markets are going to be more based on products and prices rather then the extent of bribery that takes place with foreign officials and political leaders in order to keep quiet about things like sweat shops. The act requires the full disclosure of all transactions with foreign officials and politicians. The FCPA also works with the Bank Secrecy Act and the Mail Fraud Act, which prevent any funds from going overseas in a fraudulent manner.
The second key piece is the U.S Federal Sentencing Guidelines for Organizations established in 1991, which applies to organizations and holds them liable for any criminal acts regarding their employees and or agents. The act requires that organizations monitor themselves by preventing and protecting any criminal activities that their employees or agents may be performing. Its main mission is to promote ethical behavior and increase the cost or punishments of any unethical behavior. There is a three-step guideline for the fines that are given out by the FSGO. Step one is the determination of the “base fine” in which the monetary gain of the offence would be the fine or the monetary loss caused by the organization would be the fine. There are different levels to each fine and things like evidence of pre planning calculate levels. The second step is “the culpability score” in which once the base fine has been determined the judge will add a corresponding degree of blame, which is a multiplier of the base fine, the greatest multiplier possible is 4. The last step is determining the total fine amount in which all steps are calculated and the fine is given out
Third key act is The Sarbanes-Oxley Act (2002), which became law on July 30th 2003. The Sarbanes-Oxley Act is a legislative reaction to corporate accounting scandals of the early 2000s. The act covers the financial medium of businesses. They do this through companies, such as the public company accounting over site board, which over sites body for auditing companies.
The fourth key point to prevent any legal conduct within organizations is the Revised Federal Sentencing Guidelines for Organizations which was established in may 2004. The guidelines adopted three key changes from the 1991 guidelines. The first change was the requirement of companies to evaluate exactly how effective their compliance programs are. This was made on the assumption that any program was capable of failing. The second revised guideline is the required evidence that companies are promoting ethical behavior, and the last revised guideline is making accountability a lot more defined. Any officials are expected to be knowledgeable on their programs and are required to receive training. This makes accountability a lot more known within the company and shows the employees that the company is in turn practicing ethical behavior and any unethical practices will not be tolerated.
The last Act is the Dodd-Frank Wall Street Reform and Consumer Protection Act, which legislation was put into place that promoted a fix for miss management of risk in any financial sector that in turn led to a global financial crisis from 2008-2010. A key provision of this act is the consumer financial protection bureau, in which a government agency overseas financial products and services. Another key provision is the financial stability oversight council in which a government agency prevents the failure of banks, which will in turn affect the growth of the economy.
These acts will ensure that all companies are making the correct ethical choices when running their business and ensures the public that companies are doing the right thing.