REACTION PAPER

STANDARD SETTING, BEST PRACTICES AND CORPORATE GOVERNANCE REFORM

Date reported:

May 9, 2015Submitted by:

Dianne L. Glorioso

Submitted to:

Mrs. Carolina Guerrero

Various corporate scandals from Enron, Tyco to WorldCom have given emphasis to the importance of effective corporate governance the policies and practices that determine how a corporation is operated and governed. In the wake of these scandals, US Congress passed the Sarbanes-Oxley Act of 2002 in an effort to protect U.S. capital markets and millions of American shareholders.SOX, also known as the "Public Company Accounting Reform and Investor Protection Act" (in theSenate) and "Corporate and Auditing Accountability and Responsibility Act" (in theHouse) is a United States federal lawthat set new or enhanced standards for all U.S.public companyboards, management and public accounting firms. There are also a number of provisions of the Act that also apply to privately held companies, for example the willful destruction of evidence to impede a Federal investigation. The said act contains eleven titles, or sections, ranging from additional corporate board responsibilities to criminal penalties, and requires the Securities and Exchange Commission(SEC) to implement rulings on requirements to comply with the law.It created a new agency, thePublic Company Accounting Oversight Board, or PCAOB, charged with overseeing, regulating, inspecting, and disciplining accounting firms in their roles as auditors of public companies. The act also covers issues such asauditorindependence,corporate governance,internal controlassessment, and enhanced financial disclosure. Indeed, a closer look at the major provisions of the Sarbanes-Oxley Act would show that these have counterparts in the Philippines regulatory environment. The Philippines has responded through the Securities and Exchange Commission through the issuance of a Code of Corporate Governance and Rules 68 and 68.1 implementing the Securities Regulation Code summarized in a Financial Disclosures checklist. On the other hand, professional accountants in the Philippines have adopted a Code of Ethics and moved towards the adoption of international accounting standards. There are still, however, remaining areas for improvement in Philippine law on corporate governance, such as: the required composition of the board audit committee; need for real-time disclosures and impositions of penalties for corporate and criminal fraud.When we wake up every morning we can see how beautiful Gods creation is. And we can feel what kind of privileges have been provided to each of us. We have this freedom to live and use these gods gift for our daily living. FREEDOM? For me there is no such word freedom. Nothing should free in this world. Everything must have its limit. If theres such, I can imagine a world full of war, a miserable world. The existence of the norms, standards, laws and regulations has been the cure for this word freedom. These provide boundaries from what is right and wrong. But how come that after all of these we keep doing wrong deeds? As Ive been researching for my reaction paper regarding SOX, a quotation from a journalist named Amy Anderson had caught my attention. According to her, Success will come and go, but integrity is forever. Integrity means doing the right thing at all times and in all circumstances, whether or not anyone is watching. It takes having courage to do whats right no matter what consequences will be. A reputation of integrity takes years to build, but takes only second to lose. Success is worth nothing if attained without integrity. As a member of society, we should be concerned of all our actions and consequences that will affect not just ourselves but also the people around us. We should be handling it our outmost care the rights, authority and privileges given to us. We must live knowing what is right and wrong. Entrepreneurs, to build a good public image, intend to alter, destroy, conceal or falsify records or documents. Sales people overstate their products advertisements. Applicants exaggerate in job interviews because they desperately need a job. Politicians steal the countrys wealth. CEOs overvalue their projected earnings to impress the board. Many people involve themselves on crime to gain power and money. And many more are on the list. Integrity is simply defined but in reality this word, for us, have its so much complexities. We tend to still act against what is right.As an incoming fourth year student I should be preparing myself as I will become a part of the corporate world. I should be aware of these corporate scandals and the existence of laws and regulation just like the SOX. Few years from now I will be a Certified Public Accountant who has a greater involvement on companys financial matters. CPAs should accept the obligation to act in a way that will serve the public interest and demonstrate commitment to professionalism so as to earn the respect of the society and the profession. As a professional it is its distinguishing mark to accept responsibility to the public. I would act bounded by morality, laws and regulations knowing that Im part of an organization and I should act for everyone elses good. I will be a CPA and commit myself to work with integrity. Ill be successful in a way that I can be proud of. Its glad to hear that SOX is not just adopted in the United States were it was enacted. It has its equivalent provisions in many countries such as Japan, Canada, Germany, and Philippines. Greatly, Philippines has been promoting corporate governance and awareness on possible corporate scandals which could adversely affect the country as a whole. Moreover, it could be important for purposes of providing safeguards with respect to the investors and the public. There are so much counterparts of SOXs provision and I could say that our country is not been being left of. Philippines have its Code of corporate governance, code of ethics etc. that addresses the countrys need for proper governance of businesses. Many provisions has been addressed to law makers, public and community. Sarbanes Oxley Act has been established in United States, the Philippines have adopted its own corporate governance rules and regulations as well as the other countries, but does all of this ends here? NO. Its on us. All these initiatives will be of no sense if we would still stand to gain power and act beyond the constraints of morality. This actions just provide instant gratification but IT NEVER LAST. Republic of the Philippines

POLYTECHNIC UNIVERSITY OF THE PHILIPPINES

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