- Due DateSunday, August 15, 202111:59 PMPoints Possible38
You will select an existing organization to analyze using concepts learned during the course. The selected organization does not have to be a well-known Fortune company, nor does it have to be a for profit organization. The organization can be an institution of higher education, a business corporation, a health organization, or a manufacturing company, etc.
A 7 – 10 page report of the analysis is required using 12 point Times New Roman font, double-spacing, with 1" margins and following APA’s writing style. References should be made in the text. For the purpose of this project, use the text chapters and journal articles assigned for this course in addition to any other available references such as books, journals, newspaper, internet information, or a direct interview (in case of an interview) as resources for your research.
ch12-xrrmlaeo.docx Chapter 12 Establishing a Code of Ethics and Ethical Guidelines Role of Code of Ethics (p. 235) Figure 12-1 (p. 236) highlights the integration of different components to develop the ethical standards for the firm. The social norms will always drive what is considered acceptable and unacceptable behavior. Whether it is new government regulations, or a shift in consumers’ tastes, a change in social values will also bring a significant change in ethical standards. Of the three factors within the shaded box, the institutional and organizational factors would be least likely to change since they have become firmly entrenched in the firm’s value system. As a result, the personal factors would probably have the highest probability to change over time which would also result in a change in the ethical standards of the firm. Code of Ethics and Stakeholders (p. 237) The use of the four values of integrity, justice, competence, and utility help explain how firms integrate meeting the needs and expectations of their stakeholders with the ethical strategic focus. Benefits of a Code of Ethics (p. 238) The benefits of a code of ethics are stakeholder driven. Having a comprehensive code of ethics helps create a positive work environment which makes the employees highly motivated. It also increases the potential competitive advantage of the firm which makes the customers happy. With these stakeholders being satisfied, it makes the managers happy. The net result is that the benefits of having a comprehensive code of ethics make it an easy decision whether every firm should have a code or not. The benefits would outweigh any time and financial costs involved in implementing a comprehensive ethical strategic vision. A Living Code of Ethics (p. 239) A living code of ethics refers to the constant adjustments that can be made to a code of ethics. As the expectations and beliefs of society change, so does a firm’s code of ethics. As a result, it is the responsibility of the top management team to continue to be champions ensuring that the values and beliefs presented in the code of the ethics coincide with the current views of society. In addition, having a strong positive ethical corporate culture allows the firm to make these adjustments, when necessary, in a nonintrusive manner. The task of the top-level managers in ensuring a living code of ethics is to create an organizational learning environment so that the employees are confident that their decision matches the ethical focus of the firm. The Role of Total Responsibility Management and Code of Ethics (p. 240) Total Responsibility Management (TRM) is a useful tool to use to understand how ethics management is a continuous process. Just as TQM looks for ways to continuously improve the performance of the firm, TRM serves the same purpose from an ethical management perspective. It would be useful to draw a simple three-step model to highlight the states of TRM Inspiration--------Integration----------------Innovation Process ProcessProcess The inspiration process is the first and most critical step in the model. It is the most critical step since the decision made at this step drives the other two steps. It is the responsibility of the top-level managers to not only embrace their ethical vision but also consider ideas that are not usually within the norm of the decision-making process. That is why this step is called the inspiration process. It is in this step that managers should be allowed to step outside the box in not only what their ethical vision should be but also how it should be formulated and implemented. It is also important to note that the stakeholders are integrated into the decision-making process at the inspiration process stage. Again, it is during this stage that creative ideas are encouraged; helping to satisfy the needs and expectations of the firm’s various stakeholders. The integration process addresses the ethical strategic formulation and implementation stage of the process. It is through the integration process that the ethical visions of the top-level managers are transferred into viable courses of action. By examining the strategic focus, human resource capabilities, and current management systems, the firm can adjust the vision to fit the strategic capabilities of the firm. The innovation stage examines how well the strategic vision has been implemented and looks to see where improvements can be made when the inspiration process starts once again. Steps for an Effective Code of Ethics (p. 243) The purpose of this section is to expose the idea that there are many different ways in which an effective code of ethics can be developed. The underlying theme from each of these methods is that the method must align with the ethical beliefs of the top-level managers. It is from this alignment that the steps are created in order to develop an effective code of ethics. Each code of ethics should be specialized and customized to the specific needs of the firm and the needs of the stakeholders of the firm. Value of a Code of Ethics (p. 244) The listing of reasons why a code of ethics should be adopted (developed by Bondy, Matten, and Moon) highlights both the external and internal reasons why it is beneficial for the firm to adopt a code of ethics. Again, the specific justification for each firm depends on the ethical vision and beliefs of the firm’s top-level managers. Furthermore, enlightened firms continue to adjust their code of ethics to generate positive benefits for their stockholders, employees, and other stakeholders. In addition, these same firms understand how a strong positive ethical image can enhance their competitive advantage. Examples of Codes of Ethics (p. 246) The examples of codes of ethics extend the value of a code of ethics section in the textbook. The examples of the codes of ethics show how the specific content of the code reinforces the ethical vision of the firm. Therefore, the code of ethics is a written representation of the ethical commitment the firm has for its various stakeholders. Role of Government Regulations (p. 247) The role of government regulations is critical in any development of a firm’s code of ethics. The government plays an active role in helping to shape and determine what should be included in a code of ethics. Government regulations and guidelines can dictate, in part, what should be included in a code of ethics along with the level of detail in describing the firm’s ethical commitment in certain areas. For example, bribery is illegal for US-based firms but the firm has to determine when a genuine gift ends and a bribe begins. Is taking a client out to dinner a bribe? How about giving a client a watch with the firm’s logo on it? Global Code of Ethics (p. 248) The presentation of the global code of ethics helps understand that ethical issues are global issues and how they are resolved can vary based on where the ethical issues take place. The comparison of the CRT, OECD, and UN code of ethics highlights that NRO put a significant level of emphasis on how firms conduct business around the world. In addition, this set of global codes of ethics demonstrates that NGOs are certainly stakeholders which firms must consider when they are developing and implementing their ethical vision. The global code of ethics also shows that some things that would be considered simple human rights in the United States are not necessarily so in other countries. As a result, it is important to stress that human rights are not protected in other parts of the world and that there is a large disconnect between how employees are treated in the developed world versus how they are treated in the developing world. ch4-a405dlvs.docx Chapter 4 Ethics and Financial Reporting The Role of Creative Accounting (p. 69) Creative accounting is just another way of saying that management has stepped outside the “box” related to certain accounting issues. The key aspect of creative accounting is to know where the ethical and legal interpretations of the accounting rules stop, and the unethical and illegal interpretations of the accounting rules begin. The History of Ponzi Schemes (p. 70) The discussion on Ponzi schemes could focus on how they can be created and how they eventually fail. Of course, this discussion would also coincide with the Bernard Madoff case. Very wealthy and intelligent individuals continue to be swindled out of their investments by unusually charismatic individuals would convinced the potential investors that their programs are not Ponzi schemes when in reality they are Ponzi schemes. Ethical Philosophies and Accounting Issues (p. 161) Table 4-1 which is shown on page 73 highlights the link between ethical philosophies and accounting issues. Table 4-1 is an effective table to re-enforce the philosophical ethical theories that were presented in Chapter 1. In addition, the table demonstrates how those philosophical ethical theories can be directly linked to practical application which is development of financial reports. Therefore, it is from this foundation that managers have a philosophical ethical duty to present correct financial statements and those financial statements need to be transparent so that the entire firm’s stakeholders can understand how the financial statements were created. Where were the Auditors? (p. 74) One of the most common questions asked during the recent corporate scandals was “where were the auditors during the years and years of false financial information”. Hired by the firm to evaluate the validity of the financial statements, external auditors are responsible for identifying and potentially resolving unethical and illegal interpretation of the Generally Accepted Accounting Principles or GAAP. The textbook highlights the potential conflicts of interest that allow for less rigorous auditing of the firm’s financial statements. Since the auditing fee is paid by the firm, the firm is the client and the object of the audit. Therefore, conflict of interest can occur if the auditors want to make sure the managers are happy and that they will select the same auditor in the future. Therefore, creative accounting at its limits may be considered acceptable to the auditors since the employees of the audit firm are evaluated based on the number of bookable hours that are charged to the client. One of the components of the Sarbanes-Oxley Act is that auditing firms are no longer allowed to also generate revenue by being a consultant to the firm for which it is conducting an audit. In addition, auditors may have a personal conflict of interest if they have a personal financial investment in a firm in which they are performing an audit. As part of the domino effect, the auditors want to make management happy and management wants to make shareholders happy. Shareholders are happy if there is a “clean” audit which means there are no outstanding issues that impact the validation of the financial statements. The Use of Heuristics in Auditing (p. 76) As a result, every decision is based on the individual’s personal interpretation of the information used to make a decision. Therefore, for auditors, these “rules of thumb” can supersede an objective evaluation of important information which is critical in evaluating the financial reporting of a firm. Since the rule of the external audit is to