Risks Of Noncompliance In Corporate Governance

3796 words - 15 pages

Regulatory compliance is very important for every organization. In the case of McBride Financial Services the understanding and the implementation of proper regulations are dire to the organizations future success. This analysis shows several recommendations offered to McBride and then shows the risk that the organization can face if they choose to ignore the given suggestions. This analysis also explores several organizations that have either been successful or unsuccessful in the compliance sector and shows how this has either contributed or hindered the success and growth of these organizations. Furthermore, this analysis gives McBride Financial Services a glimpse into their future either with or without the recommendations that have been given to them and also shows them what their organization has the potential to become if they are compliant and what is looming if they choose to be noncompliant.Compare and Contrast Recommendations- RecommendationsUnderstand Regulatory System and Implement Compliance friendly RegulationsAn organizations understanding of rules and regulations that must be adhered to in order for them to maintain compliance is imperative to their success. One specific recommendation that was given to McBride Financial Services was for the organization to hire a consulting firm that would aid them in learning and understanding what it takes to be in compliance. If McBride chooses not to take this recommendation then they face the risk of being non-compliant which is an umbrella statement and holds several ramifications underneath. Based on information management online organizations can potentially lose more than they bargain if they choose not to comply with Sarbanes-Oxley Act regulations."Being found in non-compliance of SOX can have other negative affects on your business -beyond the levying of fines (or imprisonment if you are found willfully fraudulent). In addition to the governance and transparency requirements of the Act described above, SOX also creates new categories of infringement that include willful destruction of documents, management retaliation against whistle blowers and fraudulently influencing a company's auditors. Some two years after SOX was enacted, cases are just now reaching the courts. Where there are courts, there are lawyers; and where there are lawyers, there are always hefty legal bills. Companies that are found to be in non-compliance with SOX will also lose millions or more in revenues as consumers shun their products, and partners get as far away as possible. Further financial damage will be wreaked as shareholder value drops due to the reaction of the capital markets. Compounding this, such companies will also face material increases in their cost of capital, not to mention less access to capital. Large companies that trade debt through bond issues will face a tough foe in the financial markets" (The Gantry Group, 2004).The scenario explains that McBride needs the financial support that they...

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