Memorandum to the Governor of California
write a memorandum to a decision-maker, such as the president of the United States, a member of Congress, a chairperson of the SEC, or a state Governor, on how to reform corporate ethics in American business today. As we have seen, legislation such as Sarbanes-Oxley has received considerable media attention, but has not prevented significant catastrophes such as the global economic meltdown of 2008. You should be prepared to propose policies that might help to ameliorate or to prevent corporate ethics lapses that might occur in the future. You have the freedom to select any policy avenues that you think might help to strengthen and fortify corporate ethics. Your memo should do the following: Set forth why your chosen policy pathway is important Compare it to and contrast it with the policy it replaces Articulate your ideas on how to remedy the issue of corporate malfeasance Proffer some recommendations to the decision-maker about how to improve overall corporate governance Please note that your prescription for change is not nearly as important as your ability to forecast potential challenges to the corporate boardroom and to predict possible ways the government could intervene to assist not only solid corporate governance, but also the interests of individual shareholders. It is recommended that you suggest at least two methods and/or policy proposals that critically address the public policy concern. Bring in facts and other data to support the policy issue addressed and make sure each fact is cited to the relevant authority. Demonstrate critical thinking by analyzing, evaluating and interpreting appropriate policy to provide original perspectives to enhance corporate legal and ethical environs. You are expected to convey complex ideas in a clear, concise and organized fashion, using the required and recommended readings from the course for analytical support. Although you are encouraged to cite from your textbook, you are required to cite a minimum of four scholarly sources beyond the textbook to support your statements.
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MEMORANDUM
DATE: 27 July, 2014
TO: Jerry Brown, The Governor of California
FROM: Joy Adamson
SUBJECT: Policies to Remedy the Issue of Corporate Malfeasance
Ethical misconduct disasters comprise serious expensive risks not only to continuity, but also to the survival of a company. Headlines seen regularly indicate that breakdowns in integrity together cost business enterprises billions of dollars in legal action, increased costs, fraudulent fiscal acts, image and reputation damage, fines, lost sales and recovery costs, client/customer trust, and potentially land top managers in jail. There is no business enterprise that is impervious to these threats (Brennan, 2012). Prudent business managers should plan to manage integrity continuity through evaluating their susceptibility to ethical catastrophe, taking hands-on measures, and preparing their business enterprises to mitigate and survive whenever such scandals break.
The purpose of this memo is to give explanation on how to reform corporate ethics in American companies at present. Two policies are proposed that might help in ameliorating or in preventing corporate ethics lapses that might happen in the future. The proposed policies are compared and contrasted with those they replace, and ideas are articulated on how to remedy the issue of corporate malfeasance. Moreover, recommendations are provided in this memorandum about how to improve overall corporate governance. In addition, the potential challenges to the change are forecasted and described in this memo along with how the government could intervene to help both solid corporate governance and the interests of individual shareholders.
Policy proposal 1: Ethics is Everyone’s Business Policy
As per this proposed policy – Ethics is Everyone’s Business – ethics in any company and business organization is everyone’s business in the organization and everyone is accountable and responsible for the reports that the company provides to the public and to the government. What this implies is simply that the policy would hold not only an organization’s senior executives liable for ethical misconduct, but also middle-level and junior staffs. The policy will go down into a company and get the company’s lower level staff members – those who are often ordered by their seniors to hide some crucial financial information or to perform some unscrupulous, unethical acts in the organization.
In essence, this policy will necessitate middle-level and lower-level staffs to swear to the legitimacy and accuracy of the information which they provide thus remedying the issue of corporate malfeasance where company senior managers force their junior staffs to hide or obscure some required information. It will also necessitate them to sign a document which states that their seniors or anyone has not compelled, threatened or otherwise instructed them to obscure, hide or fail to report any required information and material that is necessary to properly understand the fiscal reports presented by the company. External and internal Certified Public Accountants (CPAs) as well as accounting clerks who put all the data together along with their immediate supervisors would all be required to sign. This proposed policy will stipulate criminal charges for giving false information on such a crucial document and lying would be a fraud to the federal government. The proposed policy will seek to make this a Securities and Exchange Commission (SEC) requirement. In essence, this policy requires all workers as members of the company to be responsible for whatever their company produces to the public. The legal power of the legislation should make this mandatory and a requirement for being a public corporation.
Policy it replaces: Sarbanes-Oxley Act – the Sarbanes-Oxley Act (SOA) binds accountants, members of the Board, Chief Executive Officers and Chief Financial Officers to testify as regards the validity of the data. Honestly though, these senior individuals are able to evade a lot of the potential charges which may come up and they actually feel little personal risk for telling the whole truth, especially whenever their reward/profit for doing so can be significant. Marden, Edwards & Stout (2011) noted that section 302 of SOA Corporate Responsibility for Financial Information necessitates the CFO and CEO of public organizations to certify the correctness of their fiscal disclosures and statements, and to certify that they appropriately present, in all material respects, the company’s fiscal condition and operations.
With the proposed policy, the law will go down further into a business enterprise and get the staff members at the lower level; the employees who are usually instructed by their senior bosses to hide this or that information, stretch or make it that way in order to meet the company’s demands. The new policy will require even lower level workers to affirm and vow: (i) to the authenticity of their information. (ii) To sign a document which states that they have not in any way been forced, threatened or otherwise instructed to obscure, conceal, or fail to report any necessary information and material needed to properly understand the fiscal reports generated by the business enterprise.
Policy proposal 2: Respect of Documented and Undocumented Immigrant Labor Policy
This policy seeks to ameliorate and prevent some of the worst abuses that temporary foreign workers and immigrant workers in the state of California suffer, which include wage theft as well as employer retaliation against the immigrant employees who organize or report unlawful acts to the relevant authorities. Presently, the state of California has over 130,000 guestworkers (Costa, 2013). Nearly all of them work on amusement parks or farms, or in IT or computer-related industries. Even though guestworkers are lawful workers in California, some are exploited by their employers who control their visa as well as immigration status. In the event that a guest worker complains or organizes, his employment could be terminated, which will annul his visa thereby rendering him immediately deportable (Costa 2013). This leaves the immigrant worker indentured and in debt, and with just a short time for recouping his investment.
Generally, employees who have worked must be given their pay. A worker who has been abused by his boss has to come forwar...