Internal Controls and Ethics

Internal Controls and Ethics in Management

Roger R. Stoeckmann

Webster University

Abstract

Over the past decade many if not all discussions about ethics in management and business will mention the scandals the United States experienced surrounding several companies around a decade ago including Enron and WorldCom. Out of this era came Public Law 107-204, or know to most as the Sarbanes-Oxley Act of 2002. Prior to the “scandal era” the federal government already had in place statutory requirements codified in 31 U.S.C.3512 directing the federal government to adhere to the Federal Managers' Financial Integrity Act (FMFIA) of 1982. Through this study, I examine the impact of whether establishing internal controls support a strong ethics program within organizations. A literary review of written documents is compared to a real life situation where internal controls averted an ethical violation. The results indicate that internal controls are a vital part of any ethics program developed. Limitations of the study include a small sample of articles and possible or perceived bias of the military work environment.

Keywords: internal controls, management controls, ethics, management

Internal Controls and Ethics in Management

I believe that proper internal controls help support a strong ethics program within any organization. Over the past decade many if not all discussions about ethics in management and business will mention the scandals the United States experienced surrounding several companies around a decade ago including Enron; 2001, Tyco; 2002, Peregrine Systems; 2003, and WorldCom; 2002 just to name a few. Out of this era came Public Law 107-204, or known to most as the Sarbanes-Oxley Act of 2002 (SOX). This act requires the principal executive officer(s) and principal financial officer(s) of for profit companies to certify that they have reviewed the company’s...