Ethics Auditing

An ethical audit is important to establish the company’s current weaknesses and strengths concerning how it conducts itself in an ethical manner. An ethics audit will involve evaluating the company’s standard of ethic, it ethic climate, and how well the company’s employees follow ethical standards. One of the first things to evaluate in an ethics audit is if a company has a written code of ethics and how comprehensive it is. Moreover, the written code of ethics should apply to everyone in the company from the top down with a clear zero tolerance policy in place for ethics violations. Included in a comprehensive ethics code should be a method for

The survey was performed in 2010 involving members of the Ethics and Compliance Officer Association (ECOA). They focused on the evolution of business ethics by analyzing six other studies over a span of two-and-a-half decades. Members of the survey were ethics manager, but members on the previous studies were regular employees and management. The results of the analysis of the previous studies showed that ethics programs in companies during a time span of the 1980’s through the 1990’s was used to show social responsibilities and not necessarily to enforce it throughout the company. It showed that ethics programs now that companies follow ethical laws and they are motivated to be ethical. Another result of the study showed that ethics training at companies has increased since the 1990’s due to the passing of Sarbanes-Oxley and other laws directed at ethics. The passing of the laws in the early 2000’s has led to ethics being a major component of everyday

An initial new hire and employee ethics training has to be develop and administered. Also on-going ethics refresher training for use throughout the employees career with Company Q will need to be incorporated in the program. Systems will be developed and put in place to monitor, audit, and report ethics violations. A time-line to re-evaluate these programs and their effectiveness towards meeting the companies social responsibility goals will be established. Based on the evaluation a revision or revamp of the program if necessary will be initiated. The ethics program needs to be reviewed and understood by all employees and expectation for compliance very clear. This can be accomplish by tying compliance in some form to employees and leadership individual performance goals. Shareholders all the way down to entry-level employees will benefit from the ethics program which will also put the company on track to being more socially responsible. Once a code of ethics is in place and training has been given, then Company Q can begin developing trust within the company and employees as well as the community. Continued education and training will enable the company to become more socially responsible.

Independent audit in turn makes the financial statements more credible and reliable source of information

It finally has been acknowledged that simply taking an ethics class does not provide the same level of experience as providing a more integrated approach to ethics within the learning process of a student within graduate business school. Gaining the ability and competence to understand ethics is only first step to what awaits the new leaders who will be required to live an ethical life but also sustain and encourage a corporate ethical environment from which staff can also make ethical decisions. The recent financial scandals along with the younger generation’s concerns for the environment has elevated and renewed the importance of corporate leadership in providing more transparent and straightforward accounting reports as well as addressing other issues that do not encourage a culture of ethics within their organization. Wrongdoing should be addressed and ethical decisions need to be encouraged and supported instead. CEOs and board members are just beginning to present themselves and their organizations as ethical decision-makers who are responsibly provide good and wise solutions for stakeholders of the company. In the Journal of Business Ethics, “Business Ethics in North America: Trends and Challenges” the authors reviewed and

Essentially, ethics programs are meant to affect how people think about and address ethical issues that arise on the job. Gretchen Winter, vice president of business practices at Baxter International, puts it this way: By providing employees with ethics standards, training, and resources to get advice, organizations seek to create a work environment where (1) it’s okay for employees to acknowledge that they have an ethical dilemma, and (2) resources are readily available to guide employees in working through such dilemmas before making decisions (Joseph, 2000).

Ethics are a major issue which is a reason why the Sarbanes-Oxley Act was implemented. Before the Act, firms focused on growth but not as much on professional values. Revenue was the driving factor in auditing firms, and auditors were required to find new clients, keep existing clients, and cross selling. There were also penalties for not obtaining these requirements which could lead to termination (Jones III & Norman 2006). Since the Act many organizations have now implemented a code of conduct (ethics) which sets standards of how an auditor is supposed to act or a place to go to seek advice on handling different situations. The code of conduct or ethics can be viewed as a way an organization wants one to act or behave (Canary & Jennings 2007). Since implementation ethics is being taught more in college classes, and the reason for this is because of the huge scandals that have occurred. One study showed that the key leadership roles in a company often have a MBA, so teaching ethics will reach those leaders, and possibly prevent future ethical dilemmas (Sulivan, D. 2010).

The SEC has a strong case against Goodbread for violating his independence because as it is stated on the AICPA’s website, “Independence shall be considered to be impaired if: During the period of the professional engagement a covered member was committed to acquire any direct or material indirect financial interest in the client.” (aicpa.org 101-1). In Goodbread’s case this refers to the fact that he had shares of stock (direct financial interest) in his possession when he was the audit engagement partner who oversaw the audit of Koger Properties, Inc.

A social work ethextent to which social workers and agencies ics audit should focus on what currently is conhave procedures in place to identify ethics-residered to be essential or core knowledge in the lated risks and prevent ethics complaints and profession. Social work's literature suggests two ethics-related litigation. This form of risk mankey knowledge areas that should form the founagement is an essential function of an ethics audation of the audit: (1) the extent of social dit. In tort law (a tort involves a private or civil workers' familiarity with known ethics-related wrong, from the Latin "tortus' or 'twisted'), a risks in practice settings, based on empirical risk entails a "hazard, danger, or peril, exposure trend data summarizing actual ethics comto loss, injury, disadvantage, or destruction . . . . plaints and lawsuits filed against social workers The risk that should be reasonably perceived and summarizing ethics committee and court and avoided defines the common law duty confindings and dispositions; and (2) current cerning the probability or foreseeability of inagency procedures and protocols for handling jury to another" (Gifis, 1991, p. 426). This secethical issues, dilemmas, and decisions (Please tion of the audit should highlight a number of eliminate some of these citations, preferably risks germane to ethical issues encountered in the older works. Barker & Branson, 1993; typical social work practice settings. Consistent Bullis, 1995;

7. a. The audit provides reasonable assurance that financial statement information is free of material misstatements. Decision makers can uses financial information to anticipate business opportunities and to make business decisions based with reasonable assurance that the information set used to make decisions is reliable.

Colleen, an ethics audit is an effective method to monitor whether employees are following the ethics program established by the company. Employees have been found to bend the ethics rules in their favor. When employees behave in undesirable ways, it is a good idea to look at what the company is encouraging them to do. It is obvious that people see what they want to see.

(Panza & Potthast, n.d.) Ethics is very important to a company’s success. Ethical behavior can bring benefits to a business. They can attract customers, which can lead to a boost in sales and profits. It can attract the right employees and increase productivity. It can also attract investors and keep the company’s share price high. Unethical behavior on the other hand can damage a company’s reputation and make it less appealing to stakeholders. It could also result in lower profits.

It is only during moral lapses and corporate scandals that interest groups and the broader public ask themselves the fundamental ethical questions, who are the managers of the organization and were they acting with the ethical guidelines. For a long time, the issue of ethics was largely ignored, with organizations focusing on profit maximization. However, this has changed, and much attention is now focused on ethics management by researchers and leaders. The issue of ethics has arisen at a time when public trust on corporate governance is low, and the legitimacy of leadership is being questioned. Leaders are expected to be the source of moral development and ethical guidance to their employees.

Every organization also has a profession responsibility to conduct business honestly and ethically. Our readings reported, “Experts estimated that U.S. companies lose about $600 billion a year from unethical and criminal behavior” Kinicki and Kreitner (2009). The organization could avoid having ethical issues by meeting the

3 pillars of effective internal audit services- independence and objectivitiy, proficiency, and due professional care.