week 3

Question 1

explain The Responsibility of the Corporation as a Moral Agent

Answer 1

Increasingly, corporations are viewed not merely as profit-making entities but also as moral agents

They are accountable for their conduct to their stakeholders

Have same rights and responsibilities as individuals

Question 2

explain the need for organisational ethics programs

Answer 2

It is nearly impossible to know all relevant laws
Ethics programs increase ethical awareness
Organizations can become bad barrels
Pressures to succeed create opportunities rewarding unethical decisions
Established ethics programs help employees determine what behaviors are acceptable
Top management must integrate these codes, values and standards into the corporate culture

Question 3

A strong ethics program includes

Answer 3

Written code of conduct
Ethics officer to oversee the program
Care in the delegation of authority
Formal ethics training 
Auditing, monitoring, enforcement, and revision of program standards

Question 4

explain compliance orientation (compared to value orientation)

Answer 4

Compliance orientation

Requires employees identify with and commit to specific conduct

Uses legal terms, statutes, and contracts to teach the rules and penalties for noncompliance

Question 5

explain values orientation

Answer 5

Strives to develop shared values; focuses on ideals, such as accountability and commitment

Is more effective at creating ethical reasoning, the foundation of an organizational ethical culture

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Question 6

what is a code of conduct

Answer 6

Codes of conduct

Formal statements that describe what an organization expects of its employees

Question 7

what are codes of ethics

Answer 7

Most comprehensive document consisting of general statements that serve as principles and the basis for the rules of conduct
Contains 6 core values: trustworthiness;
Respect;
Responsibility;
Fairness;
Caring;
Citizenship

Question 8

explain statement of values

Answer 8

Serves the general public and addresses stakeholder interest

Question 9

to implement a good code

Answer 9

Write it
Tailor it
Communicate it
Promote it
Revise it
Live it
Enforce/reinforce it

Question 10

explain ethics officer

Answer 10

Ethics officers are responsible for managing the ethics and legal compliance programs
Assess needs and risks 
Develop and distribute the code
Conduct training programs for employees
Confidentially answer employees’ questions
Ensure government compliance
Monitor and audit ethical conduct
Take action on possible code violations 
Review and update the code

Question 11

explain ethics training and communication

Answer 11

Ethics training can
Educate employees about policies, expectations, laws, regulations, and general social standards
Raise awareness of resources and support systems
Empower employees
Top executives must communicate and enforce ethical standards
Employees need to know whom to contact for guidance when encountering gray areas

Question 12

explain systems to monitor and enforce ethical standards

Answer 12

Effective programs employ various methods to measure effectiveness
Observing employees
Internal audits and investigations
Surveys
Reporting systems
External audits
Consistent enforcement and necessary disciplinary action are essential to a functional ethics or compliance program

Question 13

explain continous improvement

Answer 13

Improving a system differs little from implementing any other business strategy
To improve its ethical performance, a company may change how it makes decisions
Centralize decisions, or decentralize them
The key is to delegate authority carefully so the organization can achieve ethical performance
Revisions are required

Question 14

Implementing ethics programs - Five factors can impact success of ethics programs

Answer 14

1. The content of the code of ethics
2. The frequency of communication regarding the ethics program
3. The quality of communication
4. Senior management’s ability to incorporate ethics into the organization
5. Local management’s ability to do the same

Question 15

explain process controls for ethics programs

Answer 15

Proper selection of employees
Ethics training
Structural and communication systems
Ethics assistance line
Help desk
Management’s commitment to the program
Comparing standards against actual behavior
Ethics audit

Question 16

define ethics audit

Answer 16

Ethics audit - systematic evaluation of an organization’s ethics program and performance to determine whether it is effective

Question 17

define social auditing

Answer 17

process of accessing and reporting a business’s performance in fulfilling the economic, legal, ethical, and philanthropic responsibilities expected by its stakeholders
Broader in scope than an ethics audit
An ethics audit might be a component of a social audit

Question 18

benefits of an ethics audit

Answer 18

Detect misconduct before it becomes a major problem
Identifies potential ethical issues and improve legal compliance
Improve organizational performance
Improve relationships with stakeholders who demand greater transparency
Sets goals against which to measure actual performance

Question 19

explain ethical crises management

Answer 19

Plans to respond to and recover from disasters that can disrupt operations, destroy organizational reputation, and erode shareholder confidence
Involves…
Contingency planning
Assessing organizational risks
Planning for potential occurrences
Providing tools to respond

Question 20

explain measuring non financial ethical peformance

Answer 20

Nonfinancial performance measures are crucial to a firm’s health
Measure wholeness and soundness of a company
“Return on integrity”
Many organizations and regulatory frameworks offer a means of capturing ethical performance
Structural 
Behavioral
Few methods:
Six Sigma
Balanced Scorecard
Triple Bottom Line
Global Reporting Initiative
ISO 19600 
Open Compliance Ethics Group

Question 21

explain risks in financial auditing

Answer 21

May uncover ethical problems a company does not wish to disclose
May reveal a problem that cannot be remedied
Stakeholders may be dissatisfied with the information
Conducting ethics audits requires financial and record keeping resources
No guarantee that auditing is the solution
Lack of standardization in auditing

Question 22

explain the auditing process

Answer 22

1. Secure top management and board commitment.
   Board members may initiate audits based on specific stakeholder concerns or in response to corporate governance reform.
   Management could be held responsible for the ethical and legal compliance programs of their company.
   As a way to benchmark their ethical performance.

2.Establish an ethics audit committee to oversee the audit process.
Ideally, the board of directors’ financial audit committee would oversee the ethics audit.
However, in most companies managers or ethics officers conduct the audits.
Individuals within the firm should be involved as well as external auditors.

3. Define the scope of the audit.
   Defined by the ethics audit committee and monitor progress.
   Scope is determined by the type of business, risks faced, and the opportunities to manage ethics.
   Subject matter definition: Environmental, Privacy, Discrimination, Product liability, Financial reporting, Employee rights.
4. Review current organizational mission, goals, and values
   Review all formal documents that make explicit comments about ethical, legal, or social responsibilities.
   Define the organization’s ethical priorities
5. Collect and analyze relevant information.
   Identify the tools or methods for measuring progress in improving employee’s ethical decisions and conduct.
   Collect internal and external documents.
   Determine a baseline level of compliance.
   Determine commitments met and unmet
6. Verify the results through an outside agent.
   Social/ethics audit consultant
   Financial accounting firm
   Nonprofit special interest group

Report the findings to:
Audit committee, managers, and stakeholders
Issue the ethics audit report to the board of directors and top executives until approved; and then submit it to external stakeholders.
The report should identify the purpose and scope of the audit, methods used, role of the auditors, and guidelines followed

Question 23

Ethics audits are similar to financial audits, but forms are different

Answer 23

Unqualified opinion
Qualified opinion
Adverse opinion
Disclaimer of opinion

Question 24

. Imagine that it’s your responsibility to select an ethics officer for your organisation.What qualities, backgrounds, and experience would you look for? Would you ever be interested in such a position? Why or why no

Answer 24

Generally, insiders who have held line management positions, who are thought to be fair, trustworthy, and credible, and who have a good relationship with the top management team are thought to make the best ethics officers. The General Council (eg., lawyers) may not be the best choice because a lawyer is trained to, first and foremost, protect the company. Employees may not feel that they can go to this person with a problem, especially, if it involves misconduct at higher levels. An ethics officer needs to have an internal as well as an external focus. She or he must be concerned about fairness to employees and customers, as well as protectingthe organisation from outside attack