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Analysis of Financial officers' Code of Ethics: Help or Hindrance

Essay by   •  September 22, 2011  •  Case Study  •  708 Words (3 Pages)  •  1,663 Views

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Analysis of Financial Officers' Code of Ethics: Help or Hindrance

As we look as ethics within the financial management scope and wonder whether it is a help or hindrance, we must first look at ethics and how it affects the financial decision-making process. The goal of a financial officer is to maximize the stability and wealth of an organization. When ethics are applied into the financial officer's decision making process it gives the officer guidelines. Ethics is described as "standards of conduct or moral judgment". (Principles of Managerial Finance, P.16) A company will take on a "Code of Ethics" for how they want to do business. Ethics affects a company's choice of investments, customers they want to do business with, how they raise capital, and trust they either have or don't have with the public. Ethics gives financial officers the checks and balances needed to weigh their decisions.

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The article "Financial Officers' Code of Ethics: Help or Hindrance", speaks to the Securities and Exchange Commission and their passing of the Sarbanes-Oxley Act of 2002. In the Article it states "The Sarbanes-Oxley Act of 2002 focuses on public accounting oversight, auditor independence, corporate responsibility, and analysts' conflicts of interest." Corporations who didn't comply with these standards were getting fined large sums of money and it became apparent that organizations needed to operate in an ethical manner or the government was going to hit their bottom line. (Financial Officers' Code of Ethics: Help or Hindrance, first paragraph)

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This article's objective for organizations to follow came from a small paragraph within the Sarbanes-Oxley Act defining the "code of ethics. The objective is to promote the following in organizations:

* Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships.

* Full, fair, accurate, timely and understandable disclosure in the periodic reports.

* Compliance with applicable government rules and regulations.

(Financial Officers' Code of Ethics: Help or Hindrance, Page 1

The Sarbanes-Oxley Act is not the first of its kind. Government regulations and codes of conduct were formed back in the 1930's. An association that grew in to what is now called the Financial Executives International (FEI) created guidelines for financial executives to follow. The FEI wanted a clear understanding of what is expected of senior executive and most notably the Chief Financial Officers (CFO's).

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The article covers the

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