On Repealing the Foreign Corrupt Practices Act: Survey and Assessment

Kim, Suk H.
September 1981
Columbia Journal of World Business;Fall81, Vol. 16 Issue 3, p16
Academic Journal
This article presents the results of a survey on the position of U.S. firms on the Foreign Corrupt Practices Act of 1977. From its inception in December 1977, the Act has been the subject of extensive debate. Significantly, 64 percent of the respondents stated that the Act should be repealed. The Act has put U.S. companies at a competitive disadvantage. The Act has forced U.S. companies to increase their audit cost substantially. In many countries, not only are foreign payments not outlawed, they are encouraged. The Act has caused the loss of missions of dollars in exports. The accounting provision of the Act recognizes that the cost of internal accounting control should not exceed the benefits received. However, many indications suggest that compliance programs burden companies with additional costs, though they receive no commensurate benefits in terms of improved controls and record keeping. The respondents said that the Justice Department and the Securities and Exchange Commission have failed to establish a set of clear guidelines. The law has been severely criticized from its inception on the grounds that it was vague and difficult to interpret. The unclear concept of the reasonable assurance clause has forced U.S. companies to increase their accounting and auditing costs.


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