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Compliance in the Era of 'Undersight'

By Daniel P. Westman
June 27, 2005

Edmund Burke's famous 18th-century dictum encapsulates why compliance efforts cannot rely on written policies or Codes of Conduct alone. After all, Enron had policies on paper forbidding the practices that brought down the company. Without people willing to report violations of law or Codes of Conduct, compliance efforts inevitably will be frustrated.

The thesis of this article is that the new civil and criminal whistleblower provisions of Sarbanes-Oxley (SOX), coupled with growing acceptance of whistleblowing in both the law and popular culture, may create a climate in which employees more frequently engage in “undersight” to report violations of law or policy. “Undersight” is a term this author has coined to describe corporate employees who witness potential fraud first-hand and voice their concerns, in contrast with “oversight” through which corporate outsiders attempt to detect fraud relying on second-hand information.

The SOX Whistleblower Provisions

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