Irrespective of the Fannie Mae debacle, it is my hope we see far more progress in ethical reporting standards in 2005. I believe we will. I think the business schools of the world are focusing more on the needs for ethical standards in business. I would like to tender the prediction that while Sarbanes-Oxley was the final straw to enforce accurate financial reporting, it was merely a precursor to the movement away from transgressions in financial reporting.

The financial health and economic welfare of global corporations is at stake when it comes to accurate financial reporting. Investors won't stand for a repeat of Enron, Tyco or recent allegations in reporting improprieties by Fannie Mae. B-Schools have been propounding ethical behavior in business for some time. University of Pennsylvania's Wharton describes their focus accordingly:

“The Ethics Project does not guarantee that all Wharton graduates will behave ethically. Rather the goal is to teach an approach for handling ethical questions and to dispel a common attitude among business students that the bottom line is the only relevant consideration. The intellectual understanding of ethical obligations may not be sufficient to insure ethical behavior, but can be an important contributor to that goal.”1

In their video interview on BetterManagement, Ethics and Legal Mandate - Survival in the Sarbanes-Oxley Era, Linnea McCord, Associate Professor of Business Law at the Graziadio School of Business and Management of Pepperdine University and Charles Kerns, Associate Dean for Academic Affairs at Pepperdine University,  outline the value of ethical behavior in organizations, not the least of which is a more sound financial future for organizations adopting ethical standards throughout their organizations.

While the media limelight is bright on US activities, the pervasiveness of the challenge is global.  The effects of Sarbanes-Oxley have a long reach, as explained in Corporate Governance Standards in the United States for Foreign Private Issuers. 

2005 will be a year for change.  Let's keep the focus on integrity in business operations and reporting.  Have a great New Year!

Jeb Brodrick
Editor
jebb@bettermanagement.com

1. The Wharton Legal Studies Department, Ethics Program