ETHICS 301 PROJECT: ETHICAL AUDIT Second Semester 2018/2019 Dr.Alawiya Allui Grades: 20%
There is nothing new about ethical behaviour in business, nor about programmes designed to improve and perhaps formalise an ethical approach to decision making within companies. In the United States, in particular, in recent years many companies have appointed a senior manager with dedicated responsibility for promoting ethical behaviour throughout the company. In Europe, such appointments are the exception rather than the rule, but many, perhaps a majority, of Europe’s major companies now have an ethical code or code of conduct.
The reasons for examining the state of a company’s ethics are many and various. They include external societal pressures, risk management, stakeholder obligations, and identifying a baseline to measure future improvements. In some cases, companies are driven to it by a gross failure in ethics, which may have resulted in costly legal action or stricter government regulation. More often, however, companies choose to do it simply because it is right, it is important, and because it is likely to bring business benefits.
Ethical auditing is a process which measures the internal and external consistency of an organisation’s values base. The key points are that it is value-linked, and that it incorporates a stakeholder approach. Its objectives are two-fold: It is intended for accountability and transparency towards stakeholders and it is intended for internal control, to meet the ethical objectives of the organisation.
The value of the ethical audit is that it enables the company to see itself through a variety of lenses: it captures the company’s ethical profile. Companies recognise the importance of their financial profile for their investors, of their service profile for their customers, and of their profile as an employer for their current and potential employees. An ethical profile brings together all of the factors which affect a company’s reputation, by examining the way in which it does business. By taking a picture of the value system at a given point in time, it can:
- clarify the actual values to which the company operates
- provide a baseline by which to measure future improvement
- learn how to meet any societal expectations which are not currently being met
- give stakeholders the opportunity to clarify their expectations of the company’s behaviour
- identify specific problem areas within the company
- learn about the issues which motivate employees
- identify general areas of vulnerability, particularly related to lack of openness
An ethical culture is supported by top management, has incorporated ethics at all levels of the organization, and contains all of the components of an Ethics Program.
Working as a group, you need to study one organization/company of your own choice and you need to the get managers’ and a lower level staff view points, pertaining to the topics on the ethical audit list.
- Write an introduction – (i) a brief discussion on the background of the company you have selected ; (ii) a list of major players; (iii) key recent changes in the industry your chosen company is located
- You need to study and discuss the company’s ethical audit in detail within your group.
A sample assessment questionnaire for the project follows:
Support by top management
- Has management established an ethical “tone at the top” by setting a good example of ethical conduct, providing positive and open communication, and supporting ethical conduct?
- Are resources adequate for the organization’s ethics program?
- Is the ethics program reviewed at least annually by top management in light of changing business challenges?
- Is there a designated ethics officer or ethics contact?
- Does the ethics code start with a statement from the CEO/President about his commitment to an ethical culture?
- Does top management certify they have received ethics training?
- Does top management positively support the ethics hotline?
- Does ethics awareness material have the endorsement of top management?
Incorporation of ethics at all levels of the organization
- Is ethics a focus during regular top management meetings?
- Are supervisors trained as contact points for ethics related questions?
- Is ethics a focus during the hiring process?
- Is ethics a focus during new employee training?
- Is ethics a focus during employee evaluations?
- Is ethics a focus during supplier selection?
- Is ethics a focus during customer contract acceptance? – Is ethics a focus during internal audits?
- Is an ethical culture ingrained in the organization’s brochures, materials, and website?
Components of an Ethics ProgramEthics Code
- Does the organization have a written ethics code?
- Does the ethics code cover key elements, such as conflicts of interest, financial irregularities, and compliance to laws?
- Do employees certify they have received and understand the ethics code?
- For publicly traded companies, is the ethics code available publicly / on the company’s website Ethics Training
- Do employees receive ethics training on a regular basis?
- Do employees certify they have received and understand ethics training materials?
- Does ethics training incorporate the company’s ethics code? – Does ethics training incorporate the company’s ethics hotline?
- Does the organization have an ethics hotline?
- Have all employees received information about ethics hotline usage?
- Is the ethics hotline confidentiality and non-retaliation policy clearly conveyed to employees? – Does the organization provide ethics hotline information to employees and other shareholders via formats such as postings in break rooms and the company website?
- Are ethics hotline reports given priority and addressed consistently?
- Are ethics hotline reports reviewed for trends that suggest organization changes are required? – For publicly traded companies, is the “receipt, retention, and treatment” of ethics hotline reports regarding “questionable accounting or auditing matters” aligned with the Audit Committee
- Is the importance of ethics communicated to all employees on a regular basis via formats such as organization newsletter articles and posters?
- Do the ethics articles cover topics that are interesting, engaging, and in pace with the times?
- PLEASE KEEP IN MIND that it is impossible to produce an acceptable report if you have not researched widely. Some have failed the assignment because of lack of sufficient research, so it is important to start work on it early.
Report should be maximum 15 pages in length and attach all the supplementary material (such as company info, Code of Ethics, Managers’ Visiting cards, employees info etc.) with your report.