Ethics And Compliance Paper

1652 words - 7 pages

Ethics and Compliance Paper
Ethics and compliance with laws demonstrates the integrity of corporations that strive to advocate these. Ethics serves as the backbone for a company to sustain a secure financial environment. To do so companies have to comply and make it a priority to incorporate these laws into every day practices. This paper will evaluate the role that ethics and compliance plays in Wal-Mart’s financial environment, explain Wal-Mart’s procedures to follow ethical behavior. It will also identify the processes that uphold SEC regulations as well as evaluate and calculate the company’s financial performance for the last two years discussing how that describes Wal-Mart’s ...view middle of the document...

Wal-Mart believes that privacy is more than an issue of compliance – it is one of trust” (Wal-Mart Stores, 2008, p 10) The corporation created the statements of ethics that every employee signs when hired, which direct employees in making ethical decisions.
The statement of ethics consists of 10 principles that stress the importance of honesty, lawful acts, avoiding conflict of interests, and discrimination is not acceptable in the workplace. Employees are unauthorized to accept gifts of gratuity, competing unfairly, and Wal-Mart has an open door policy to report suspicious violations that may occur within a store, home office, or the factory floor. A clause in the ethical statement integrates penalties for violations that could include termination of employment. The statement of ethics is an essential procedure implemented by this corporation to ensure ethical behaviors.
Processes used to comply with SEC regulations
The Wal-Mart company’s comply fully with the Securities and Exchange Commission’s regulations. Wal-Mart has an audit committee consisting of four directors who are not a part of the Wal-Mart company. These four directors are independent based on the rules of the Securities and Exchange Commission and the NYSE. With the SEC, the management of Wal-Mart is over the financial reporting and internal functions of Wal-Mart’s consolidated financial statements. Within the audit procedures, the four person audit committee also appoints the independent auditor for Wal-Mart and the audit committee also watches over and monitors the auditing processes.
Wal-Mart also conducts regular meetings with the Audit Committee to ensure they are complying with the Security and Exchange Commission’s regulations. As per Item 401(h) of Regulation S-K broadcasted by the SEC, Wal-Mart appointed another independent person not affiliated with Wal-Mart as the Audit Committee Financial Expert. Also pursuant to the SEC laws, Wal-Mart has ensured that the independent auditor assigned by Wal-Mart is independent by having the Audit Committee reviews all applicable audit-related material, non audit material or services and also are responsible for pre approving the audits the independent auditor may do.
To further comply with the SEC, Wal-Mart has approved an executive compensation committee who may review and approve the executives, president and Chief Executive Officer, and others on the Wal-Mart board who may be subject to the laws of the SEC.
Measuring Financials
Liquidity
Liquidity is important because it is a test to see how well a company can convert current assets into cash to pay debt off (Keown, A. J., et al, 2005). The Current Ratio test is the easiest way to determine how liquid a company’s assets are. According to Wal-Mart’s financial records the liquidity for 2009 is:

Whereas in 2010 the computation for current ratio is:

Comparing the two values one can determine that Wal-Mart is becoming less liquid. It is also not a...

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