Ethics and Compliance

"Fiscal 2011 was a year of great accomplishment for The Walt Disney Company, marked by creativity and innovation across our businesses globally, record financial results and numerous important steps to position the Company for the future" (Iger, 2012, p. 1).

Robert Iger, President and CEO of The Walt Disney Company states that Disney's future is not only in the stories and experiences they create, "but how we do business to make lasting positive change" (Iger, 2012, p. 2).Compliance with the Securities and Exchange Commission (SEC) is an area that Disney has worked to improve upon after they were poorly rated prior to the Sarbanes- Oxley Act (SOX) of 2002. The Disney Company has implemented internal controls, processes, and procedures that comply with SEC rules and those procedures are disclosed in the company's annual report to shareholders. Ethics and Compliance at Disney Since its foundation in 1923, The Walt Disney Company has established itself as the leader in entertainment.Encompassing theme parks, resorts, entertainment studios, media, and various consumer products the name, Disney, has come to mean world class leader anywhere in the world, no one does it better then The Walt Disney Company.

While every company has a goal of making money, Disney’s financial goals include ways to fully maximize its earnings and cash flows, increasing both long-term share holder interests and profits as well as enticing new investors to invest.Disney is committed to guidelines and procedures including those of the SEC to ensure company viability thru the future, and this paper will provide an insight into Disney’s financial performance. Disney's procedures for ethical behavior A company’s success is affected by its views of ethical issues and its willingness to comply with guidelines and policies. Disney’s view toward ethical behavior is not only the correct stance, but it has proven to also be beneficial to their guests, employees, and businesses.

With the same draw to investors, Disney’s ethical behavior also draws employees in the same way, making Disney a very desirable place for employment. These draws also translated and strengthened their brands, both nationally and inter-nationally, and around the world. Disney continues to build and refine corporate efforts in an effort to maintain a high level of ethics by process refinement, business diversity, and new approaches to business behavior.External Disclosure As previously stated, Disney is in full cooperation of the SEC policies, which requires Disney to posts all interactive data files pursuant to Rule 405 of Regulation S-T.

Disney complies with this regulation by hosting a section on their website linking to previous SEC filings. Internal Disclosure Disney’s policy mandates senior management members, such as the President, CFO, Managing VP, and Internal Counsel, sign all SEC filings. This policy alone helps to ensure that filings are accurate, and that compliance with proper reporting requirements is upheld.Disney also ensures this information is communicated to their stakeholders via the investor's management team. Internal Controls over Financial Reporting Disney acknowledges and accepts their accountability for creating accurate, and reliable, financial reports.

Accounting for the accountability, the Disney utilizes a structured internal control framework. Disney’s utilization of the established framework is responsible for the reporting accuracy as of to date. Due to these precautions, the SEC will ensure Disney’s financial reporting remains accurate.Independent Accounting Auditors Disney also makes use of independent auditing firms to provide a third party analysis of their financial reporting. Management reports that third party firms confirm Disney’s control framework functions at a level that allows management publicly ensure their statements. Third party independent reports to the board of directors, and shareholders and has stated that Disney’s processes provide a reasonable level of assurance that controls in affect are working and effective.

Due to Disney utilizing independent auditors, the assumption of corruption that may be attempted by the company is minimized due to the transparency and the involvement of an independent firm. Disney has implemented an audit committee charter that oversees and upholds the policies and ensures compliance with audits and auditors. This charter is also charged with responding to complaints pertaining to the financial reporting of The Walt Disney Company. By utilizing this charter, Disney truly is committed to being a financial ethical company. (Disney, 2011).Explain how financial markets work in the United States.

Financial markets are defined as mechanisms that allow people to buy easily and sell financial claims (Titman, Keown, & Martin, 2011). In the United States, there are three important sets of players who interact in the financial markets. (Titman, Keown, & Martin, 2011). There are the borrowers to include businesses that require money to finance their purchases. The savers or investors save money for different reasons.

The last players are the financial institutions that bring the borrowers and savers together.The institutions that make up the financial marketplace consist of commercial banks, finance and insurance companies, investment banks and companies (Titman, Keown, & Martin, 2011). The commercial bank that makes deposits and loans is perhaps the most familiar financial institution. Companies sell shares of stock that is a type of security that shows ownership.

The securities markets allow companies and individuals to trade the securities issued by public corporations. The primary market is a market in which new securities are bought and sold for the first time (Titman, Keown, & Martin, 2011).Investors, buy, and sell shares in the stock market or the secondary market. Money exchanged does not go to the company. Investors buy stock in a company with hopes that the price of the stock will increase in value. A company will demonstrate that it has superb products and services for potential investors.

Investors will sell their stock when the company is not doing well or growing causing the price of the stock to go down along with the company. Identify processes the organization uses to comply with SEC regulations.The Board of Directors of the Walt Disney Company is responsible for the Company’s systems of internal control, preparation and presentation of financial reports, and compliance with applicable laws, regulations, and company policies. Disney was known as having one of the worst boards of director in Corporate America (Business Week, 2002). Disney then restricted key audit and compensation committees to independent directors (Business Week, 2002).

The Audit Committee Charter was established by the Walt Disney Company to assist the Board of Directors in its duties to the Company and its shareholders.The mission of the Audit committee is to maintain integrity of the Company’s financial statements. The Audit committee ensures the compliance of all legal and regulatory requirements. The Committee will also maintain a relationship with independent auditors and will oversee that management has implemented and effective system of internal control.

The Securities and Exchange Commission will enforce regulations and hold the company responsible for any violations of rules and regulations.Disney's Financial Performance Despite the troubling economy, Disney has an overall positive outlook. An analysis of the financial ratios of the company shows a few items that are worsening, but the positive elements outweigh the troublesome trends, and the company reports reflect a company that weathered the economic downturn with some trouble, but that has a promising future. The debt ratio is also slightly higher, going from 0. 46 in 2010 to 0.

48 in 2011 (Yahoo! Inc. , 2012). This is also very minor and not worthy of comment or reflective of an increase of economic burden on the company.The cost of debt in this economy is very low, and it is unlikely that the debt is costing Disney more than they are profiting. The average collection period went from 65.

23 in 2010 to 68. 45 in 2011 (Yahoo! Inc. , 2012). An increase of 5% to the average collection period is not of significant concern the related fundamentals do not reflect problematical trends. If the changes that led to this increase also resulted in collectable profits higher than the costs associated with the longer collection time, this is an overall improvement, though it is minor.Disney's Financial Health Total stockholder equity dropped between 2010 and 2011, dropping from $37.

52B to $37. 39B, representing net reduction in shareholder equity of $134M (Yahoo! Inc. , 2012). Although any reduction in stock value is undesirable, a reduction of 0.

35% is not an item of concern, particularly when other items are reflecting overall improvements to company performance. The current ratio improved very slightly between 2010 and 2011. For fiscal year 2010, the current ratio was 1. 11, and this increased to 1.

4 in 2011 (Yahoo! Inc. , 2012). This is such a minor improvement that it may not be worthy of comment, other than that such an improvement occurred during a significant recession.Conclusion "Based on their evaluation as of October 1, 2011, the principal executive officer and principal financial officer of the Company have concluded that the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) are effective" (Iger, 2012, p. 2).

Disney's financial health remains firm with a slight overall improvement in 2011, in spite of the current economic climate. In accordance the SOX Act the annual statements of The Disney Company were audited for effectiveness and compliance by PricewaterhouseCoopers LLP, and independent register public accounting firm (Iger, 2012). The analysis of The Walt Disney Company's financial reports leads to the conclusion that Disney is truly committed in their efforts to being a financially ethical company.