ETHICAL CONSIDERATION FOR ORGANISATION:-
>CORPORATE RESPONSIBILITY FOR ETHICAL
A company employing many thousands of employee the organization
still have a responsibility to ensure that to the best of its ability that all
those employees are behaving ethically to achieve control, the organization
defines the principles of behavior into desires by identifying and documenting
the organizational values creating code of conduct and ethics and implementing internal
controls.
> important for an organization to have a code of conduct:-
In the absence of a defined code of conduct for ethics,
employees either follow their own beliefs and values or look for guidance
from the leadership, therefore, determining the expected pose of action.
Management must hold itself to a higher standard of conduct than is expected from those who are supervised.
>benefits of ethical value in an organization:-
Research also has shown that strong ethical culture can
impact bottom-lying improvement.
Like the higher level of productivity Improve interpersonal
dynamics and lower the risk of fraud.
All results in better financial performance for the organization.
>how an organization impacts its behavioral values:-
If employees have been properly trained with ethical values
in place the culture of the company will develop by its code of
ethics.
An organization's culture is made up of the accumulated organizational culture behavioral actions and all of its employees over time. A culture that is
in alignment with organizational core values and code of ethics with a tent to
strengthen and reproduce the decide ongoing behavior.
This is elected by a culture where everyone from the top executive to
a level employee understands shares and lies same with a set of values everyone
acting in alignment with values will result in increased productivity lower the risk of
fraud and improve the financial result.
>IMPORTANCE OF EMPLOYEE TRAINING:
Maintaining an ethical organizational structure
Employee training is a key part of maintaining an ethical organizational
structure
In addition to having each employee read and understand the
code of ethics training should explain the concept that lies behind the code of conduct.
The training also should translate a high-level corporate-wide ethics statement into the expected behavior of a specific position this makes the code of ethics easier to understand a more memorable.
RELEVANT PROVISIONS OF IMA STATEMENT MANAGEMENT ACCOUNTING, VALUES, AND ETHICS FROM THE INCEPTION TO PRACTICE TO THE BUSINESS SITUATION:
The values and ethics statement published by IMA contains
many important provisions. To asset an organization in developing adopting and maintaining an ethical framework.
According to the statement of the management accountant [sma] for
those in management, accounting provides the institute management accountant
IMA] created the statement ethical provision practice.
Other major global accounting bodies also maintain broader ethical conduct.
The intent of the statement of management accounting is to make
all the management accountant or accounting professional a rare of their
responsibilities as their change of agents within their organization supporting
the maintenance of effective internal controls and ensuring that their organization
have adopted and fully implemented a employees ethics and compliance program
including a code of ethics nonfinancial helpline.
Ø
GOVERNMENTAL AND INTERNATIONAL IMPLICATIONS WITH
ORGANISATIONAL ETHICS:
Ethical behavior result from actions that are aligned with a core set of values.
Government attempts to legislate a broad set of values by
rules, laws, and regulations that individuals and organizations are required to
follow understand, and apply applicable laws or a key part of organizational
ethics.
Ø
Foreign concept practice act [FCPA]
The US FCPA was passed in 1977 as a result of a securities and
exchange commission investigation in the 1970s that reveal 100s of companies
admitted to making questionable or illegal payments to foreign government officials to score a favorable business action.
The FCPA forbids an American company doing business in other
countries to bribe foreign government officials to secure a business.
Global corporation based in the US also has to follow with
Sarbanes Oxley act [sox act]
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Section 406
Soc, the act requires companies to adopt a code of ethics for
senior financial officers.
A code applies to the firm's principles financial officers
controller principles accounting officers
As well as principles of executive officers.
Sox 406 section also defines a code of ethics such as a standard
as a responsibility to promote.
Honest and ethical conduct including an ethical holding of
actual was a panel of interest between personal and professional conflict
relationship
A full accurate timely and understandable disclosure of periodic reports
Complaints with government applicable rules and regulations.
>human performance feedback loop
>security tools
Whistle-blowing framework [ethics helpline]
Ø
Human performance feedback loop:-
To improve complaints, the performance review system must align with organizational
values and ethics statement employee job description requires competencies, and
performance objectives should include ethical expectations employee reviews conducted annually should evaluate individual compliance with ethical expectations and align with operational goals.
Example: an evaluation rates not only the accuracy and timeliness
of an employee report it also rates his performance to retain whole others with
dignity and respect.
Ø
Security tools
Another useful way to measure ethical performance is the
use of a survey using the code of ethics organization as a source of security could
have employees rate how well the organization is doing.
Ø
Whistle-blowing framework[ethical helpline]
It provides employees who identify ethically questionable
behavior by others with the confidential wait to seek advice and report ethical
violation research have shown that employee outlines and valuable reporting mechanisms for discovery fraud within the organization.
It is the hotline anonymouse truly and also can be used by employees to
access advice on the ethical situations an employee reports ethical issues without fear of retaliation.
THE FRAUD TRIANGLES
Often some aspect of fraud underlies ethical situations management or accounting professional skills.
Fraud is simply an act of deceit or a branch of conduct. Perpecterate motive for profit or gain some unfair or dishonest advantage.
There are various types of fraud,
Note: fraud against the company can be committed either by occupational fraud internally by employees managers, or workers of a company or externally by customers, vendors, or other parties.
It is important for management and accounting financial professionals totally understand how fraud activity occurs
This knowledge can provide the management and financial accounting professional with the ability to recognize the potential for fraud and take thought-active steps to mitigate its occurrence the underline presumption model of this is that, is these 3 factors must be present at the same time for a fraud total place.
PRESSURE
Such as financial need may often provide a motive for committing fraud.
Example: the need to meet earning operations to sustain investors' confidence.
The need to meet productivity targets at work and the ability to pay the bills.
OPPORTUNITY
It defines the method by which the crime can be committed.
Individual fraudsters must see some way he/she can use his/her position of trust to solve the financial problem within the law and persuade risk of acting caught.
Example:
An individual committing fraud sees an internal control weakness thus behaving in a way that one will notice if more amount of money is taken.
RATIONALISATION
It involves the individual fraudster justifying the crime himself in a way that makes an acceptable or justifiable act.
Common rationalization an individual use include,
I was underpaid
My employer cheated me
I was entitled to the money
MODEL PHILOSOPHY
Teleology; is a group of moral philosophies in which an action is judged to be morally right if it practices a decided result and does it is focused on the consequence of the action.
Egoism: if focused on the consequence of the individual and against will choose the alternative that contributed most to his/her self-interest through egoism is a moral philosophy egoism is not an ethical principle.
Deontology: it focuses on the right of the individual and is a system of ethics based on respect for all persons.