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Slide 1: Sarbanes-Oxley Act and Internal Investigations In the corporate world, numerous issues crop up every day that require immediate attention. Therefore, every enterprise and organization should implement strategies to deal with these issues in a proper and effective manner. If the company instead tries to brush it under the carpet, seemingly small issues could snowball into huge problems. With a wide range of existing federal and state regulatory statutes, companies are courting trouble if they fail to conduct successful investigations and prosecutions in response to allegations of mismanagement or employee misconduct. The most common concerns prevalent in the corporate sector are issues of harassment, ethical violations, accounting irregularities, retaliation, and discrimination. Recent court rulings have made it very clear that it is a company’s responsibility to conduct a prompt and thorough investigation the moment the company management is notified of any wrongdoing. Sarbanes-Oxley Act When various scandals such as Enron, Tyco International, Adelphia, Peregrine Systems, and WorldCom rocked the corporate sector, the Sarbanes-Oxley act was enacted on July 30, 2002, to save billions of dollars in investors’ money. Also known as the 'Public Company Accounting Reform and Investor Protection Act' and 'Corporate and Auditing Accountability and Responsibility Act', this IT regulatory compliance act was formulated to set guidelines for the implementation of proper and secure electronically stored information management policies. Whistleblower Protection under the Sarbanes-Oxley Act Although there are several employee protection statutes in existence, the famous Sarbanes-Oxley Act has regulations for the protection of those employees who raise their voice against corporate misconduct. Known as Whistleblower Protection, it is an important aspect of the Sarbanes-Oxley Act which states that enterprises and organizations cannot “discharge, demote, suspend, threaten, harass, or in any manner discriminate against” a whistleblower employee. Per this act, · Protection would be extended to those providing securities fraud information to: a. a law enforcement or federal regulatory agency b. Any committee or member of Congress c. Any person who has the authority to carry out investigation against any misconduct or irregularities within the company. · Companies cannot take action against any employee who partakes in proceeding regarding securities fraud. · Companies should implement procedures for employees to submit their concerns pertaining to auditing matters, confidentially and anonymously. · Any employer who takes action against any whistleblower would have to pay a large fine and could face ten years in prison.
Slide 2: Benefits of Conducting a Corporate Internal Investigation In such a highly regulated climate, it is definitely impossible for the management of any enterprise or organization to be nonchalant and close their eyes to the irregularities going on within their organization or enterprise. Instead of being intimidated by the internal investigation, companies should look on the brighter side of conducting an investigation. Let’s look at the benefits of conducting proper internal investigations: · Resolve problems faster and thereby prevent them from reoccurring or escalating into a huge issue · Identify and understand existing problems within the organization or enterprise · Manage the workplace more efficiently · Avoid lawsuits or reduce damages or penalties in subsequent lawsuits · Boost employee morale and productivity · Avoid external investigations · Trim down legal and financial costs. Know more on Legal e-Discovery. However, since all complaints may not be genuine, the objective of corporate internal investigations should be to find out the facts in order to come up with the best possible results. Know More on Early case assessment tools. Electronic data discovery Legal ediscovery