READ THIS & SUMMARIZE IN A PARAGRAPH or 2 NO PLAGIARISM!The Need for a Code of EthicsEthical principles are derived from cultural values, societal traditions, and personal attitudes on issues of right and wrong. Integrity and individual ethics are formed through a person’s life experience. Ethics plays a critical role when people make choices and decisions. Although individuals have their own values and may behave differently from one another, firms often choose to establish a formal expectation, through a code of ethics, on what is considered to be ethical within the group in order to promote ethical behavior. Ethical behavior prompted by a code of ethics can be considered a form of internal control. Given today’s diversified and globalized business environment, a firm will have to rely on the ethics of its employees to operate efficiently and effectively. In addition, the importance of a code of ethics should be emphasized because employees with different culture backgrounds are likely to have different values.In addition, many professional associations have developed codes of ethics to assist professionals in selecting among decisions that are not clearly right or wrong. Some examples include the American Institute of Certified Public Accountants (AICPA), the Information Systems Audit and Control Association (ISACA), the Institute of Internal Auditors (IIA), and the Institute of Management Accountants (IMA). The certification programs of these associations require the knowledge of the codes of ethics in developing professionalism.Corporate Governance as Addressed by Sarbanes-OxleyThe impact of public policy on the accounting profession through the enactment of laws and regulations has been well-documented and can be traced back to the 1930s.1 Among those policies enforced, the Sarbanes-Oxley Act of 2002 (SOX) has probably had the most far-reaching effect on public companies and accounting firms. This bill was a response to business scandals such as Enron, WorldCom, and Tyco International. SOX requires public companies registered with the SEC and their auditors to annually assess and report on the design and effectiveness of internal control over financial reporting.
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