Republic of the Philippines

POLYTECHNIC UNIVERSITY OF THE PHILIPPINES

Santa Maria, Bulacan Campus
Km. 39 Sitio Gulod, Brgy. Pulong Buhangin, Sta. Maria, Bulacan 3022

REACTION PAPER
STANDARD SETTING, BEST PRACTICES AND
CORPORATE GOVERNANCE REFORM
Date reported:
May 9, 2015

Submitted 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 the Senate) and "Corporate and Auditing Accountability and Responsibility
Act" (in the House) is a United States federal law that set new or enhanced standards for all
U.S. public company boards, 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, the Public 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 as auditor independence, corporate
governance, internal control assessment, 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.