Regulatory Environment Essay

            Based on the previous decisions made by Kudler, the regulatory environment in which the company operates would involve answering three basic questions. Upon answering such questions, Kudler should also provide the rationale for making such decisions and how those decisions could influence the operating performance of the company.  For instance, addressing such questions/statements should also include the possible problem, the solution, and the   respective schemes on its implementation.

Organic produce does not have preservatives.

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            Kudler as a business establishment should be able to ensure that its products indeed are organic produce. This entails the assumption that no preservatives were added, no fertilizers or other chemicals were involved during its planting and harvest and that the products of Kudler are easily perishable. The company therefore should be able to monitor where they get their products and see to it that the supply chain maintains the integrity of Kudler as an organic produce retailer. The provision of such initiatives not only stresses the social responsibility of Kudler but strengthens their corporate identity as well. Ensuring the authenticity of claims that Kudler products does not have preservatives, would mean continued customer loyalty. This same loyalty is vital in any business. The corporate identity of Kudler banks on the fact that they have products safe for human consumption and creates healthy awareness on organic produce.

What product liability implications does this have for Kudler?

Under business law principles, all businesses have a legal responsibility in their claims about their products (UCC Index, 2005). This means that Kudler should not be negligent of the responsibilities that it has to its customers and must be able to satisfy the trust their customers give to them. It is the obligation of Kudler to recognize the capacity of the company to satisfy their customers in order to gain their acceptance.

What regulatory implications does this have for Kudler?

            According to Section 404 of the Sarbanes-Oxley Act, companies including Kudler are required to have a stable and efficient working framework of company accounting principles which are geared towards the integration of the company’s IT systems and accounting frameworks (Lahti, et. al., 2005). Through the act, the presence of a Kudler accounting auditor which is legislated to be independent from the company board is also instructed to make a report on the company’s assessment of the effectiveness of the certain corporate entity to report financial assessments (Dale, 2004).  This gives a certain corporate entity in the United States to have financial entities that are able to independently monitor corporate operations through approved and SOX-compliant accounting practices.

            Furthermore, Kudler is then compelled to exert efforts in the production of such reports. Failure to do so may entail to the non-compliance to the act and may imply corporate dishonesty thus leading to government sanctions.

            On the other hand, the increase of efficiency rates in the long run remains a promising compensation to rising costs of Kudler’s adaptation to the act. Upon implementation of the provisions of the SOX Section 404, the company would then be able to gain increased efficiency rates as an effect of the learning curve principle in terms of controlling as well as implementation issues that are geared towards the creation of better corporate practices.

References:

Lahti, Christian, and Roderick Peterson. (2005). Sarbanes-Oxley : It Compliance Using Cobit and Open Source Tools. Rockland, MA: Syngress Pub. Inc., 2005.

Miller, Dale. (2004). Impact of the Sarbanes-Oxley Act of 2002 from an Information Technology Perspective

Uniform Commercial Code – Index. (2005). Retrieved February 17, 2009, from http://www.law.cornell.edu/ucc/index.htm

 

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