Guest Author - Mary Salzman

This article is a continuation of a prior article about SOX Section 409 - Real Time Disclosures.

When a business incorporates one of the needed documents in their corporate kit are the Bylaws of the corporate. Simply stated the bylaws are the governing rules by which the corporate must adhere. All sorts of information is covered in the bylaws - how often meetings of the officers and shareholders must be held, the size of the board of directors, how notice is given for meetings and so on.

Some important items that have not been covered in the bylaws in the past have been ethical considerations, social responsibility and fair treatment of the shareholders. You might think these topics have only been brought to the forefront after the accounting disasters that occurred in the recent past at WorldCom Inc., Enron and Arthur Anderson. This is not true.

When I was working on my undergraduate degree in the 1970's Ethics in Business and the Social Responsibility of Business were two of the required business classes at St. Louis University - and had been for quite a few years. I still remember vividly the lectures given by Professor Gruenberg on these topics. At the time, as young as I was, it was such a foreign concept to me - the fact that corporations have a responsibility to the communities in which they place their factories, to their shareholders and to their employees.

The failure of a business to self-regulate and practice full disclosure of financial statements information is a failure of corporate governance. When the failure of corporate governance affects the financial well being of employees and the investing public (many of whom base their ability to comfortably retire, educate their children and provide for unexpected medical expenses on this information) then this lack of corporate governance is particularly egregious.

My next article will discuss some of the revenue, expense and liability misstatements that have occurred in the recent past.