Introduction to me What is Ethics? Ethics is about how we meet the - - PowerPoint PPT Presentation

Introduction to me

“Ethics is about how we meet the challenge

• f doing the right thing when that will cost

more than we want to pay”

The Josephson Institute of Ethics

What is Ethics?

What is Business Ethics?

Rules that govern how businesses

• perate, how business decisions

are made and how people are treated.

Stakeholders

• Accounting ethics – business depend upon

complete honesty and transparency

• Attorney ethics - high moral obligation to keep

their clients secrets confidential

• Medical or medical research ethics - protection of

their human subjects when it comes to treating patients or conducting experiments on patients

Factors That Affect Business Ethics

• Honesty
• Objectivity
• Integrity
• Carefulness
• Openness
• Respect for intellectual

property

• Confidentiality
• Responsible publication
• Responsible mentoring
• Respect for colleagues
• Social responsibility
• Non-discrimination
• Competence
• Legality
• Human subjects

protection

Ethical Dilemmas

Where the decision you must make requires you to make a ‘right’ choice knowing full well that you are:

– Leaving an equally ‘right’ choice undone – Likely to suffer something bad as a result of that choice – Contradicting a personal ethical principle in making that choice – Abandoning an ethical value of your community or society in making that choice

Resolving Ethical Dilemmas

• Step One: Analyze the consequences
• Step Two: Analyze the actions
• Step Three: Make a decision

Ethical Dilemma Exercise

That’s Why its called a Dilemma

What is the purpose of accounting?

To provide true information to decision makers

Accounting Ethics

Internal and external guidelines Keeps a business from generating inaccurate financial reports or misrepresenting their financial standing

What is the relationship between truth and accountants?

“The auditor’s job is to determine what is and what is not true, then to assure that what is true is properly communicated to the stakeholders.” – Richard L. Ratliff

What is the relationship between you and the truth?

• CPA’s are looked upon as the “watchdog of

business,” the “trustworthy guardians of truth.”

• Perception that the integrity and independence
• f CPAs is beyond reproach, beyond question

Look for the Thinking Errors:

Management Accounting

“We work for management. Our job is to make management look good.” “Our obligation is to our shareholders. Anything we do to make the stock price go up is ethical.” “Every good accountant knows where to find it.” “You’re not being a team player.” “You’ve got to stop thinking like a CPA and start thinking like a management accountant.” “You WILL make this journal entry.”

Look for the Thinking Errors:

Public Accounting

“We followed GAAP.” “Enron didn’t do anything illegal.” “If you want more transparency, you need to change the rules. Don’t blame us.” “Those partnership documents are incredibly complex and 80 pages long.” “Our capital markets are the most efficient in the world.”

Why are Ethics Important in Accounting?

Privy to sensitive information Gives accountants a good deal of power Trust between an accountant and their clients not be abused

Responsibility of Accountants

Maintain their independence, objectivity and integrity. Otherwise, accountants and their clients at risk for: – legal action –public embarrassment –loss of profits –poor reputation

Financial statements must be prepared accurately

Warren Buffett “Earnings can be as pliable as putty when a charlatan heads the company reporting them."

Triple Bottom Line

FedEx Kinkos, Nike and Tesco, by small mom-and-pop shops like Jessica Alba’s non-toxic baby product company, The Honest Co., In the last five years, about half the companies in the Fortune 500 have begun publishing corporate social responsibility annual reports. The reports discuss the companies’ sustainability and corporate social responsibility approaches, provide their mission statements and outline all the efforts undertaken to achieve their goals. What’s more, a report from the Social Investment Forum—a national nonprofit membership association dedicated to promoting the concept and practice of socially and environmentally responsible investing—found that $2.3 trillion were invested in socially responsible investing mutual funds in 2005.

• When to Use the Triple Bottom Line
• The Triple Bottom Line is essentially a reporting system. Of itself, it doesn't actually improve the

company's impact on people or the environment, any more than the action of producing a set of management accounts would affect profits.

• However, it can be used to drive improvements in the way an organization impacts people and the

environment by helping managers focus on what they need to do to improve all of the bottom lines, and keeping this work high on their agendas. In this case, the Triple Bottom Line is being used as a type of Balanced Scorecard Add to My Personal Learning Plan.

• As with all measurement systems, though, the cost of monitoring and calculating three bottom

lines can be considerable. And you can only justify this cost if you can do some greater good as a result of having the figures. What's more, you certainly don't have to have Triple Bottom Line reporting in place to treat people well, or be conscientious about your impact on the environment. In many cases, money that could be spent on monitoring the Triple Bottom Line could better be used on people- or planet-friendly initiatives.

Global Business Ethics

Ethical Issues in Global Business

• Marketing and safety practices
• Nestle: Baby Killers; Union Carbide: Bhopal
• Sweatshop and labour abuse
• Wal-Mart’s Kathy Lee collection (20 hrs/day @ $0.20/hr)
• Corruption and bribery
• Gulf Oil: ‘political contributions’ to Korea ($4.2 million)
• Lockheed: bribes to Middle East ($22 mil) and Japan ($12.5 mil)

Improving Global Business Ethics

• 1. The right to physical

movement

• 2. The right to ownership
• f property
• 3. The right to freedom

from torture

• 4. The right to a fair trial
• 5. The right to

nondiscrimination

• 6. The right to physical

security

• 7. The right to freedom of

speech and association

• 8. The right to minimal

education

• 9. The right to political

participation 10.The right to subsistence

Fundamental International Rights

Improving Global Business Ethics

• Inflict no intentional or

direct harm

• Produce more good than

bad for the host country

• Contribute to host

country’s development

• Respect the human

rights of their employees

• Pay their fair share of

taxes

• Respect local cultural

beliefs that do not violate moral norms

• Cooperate with the

government to develop and enforce background institutions

Seven Moral Guidelines for MNCs

Code of Ethics

Codes of Ethics

• https://www.ifac.org/ethics
• http://www.ethicsboard.org/iesba-code
• http://www.icaew.com/en/technical/ethics/icaew-code-of-

ethics/icaew-code-of-ethics

• http://www.aicpa.org/InterestAreas/Tax/Resources/StandardsEthics/

Pages/default.aspx

• http://www.accaglobal.com/us/en/student/exam-support-

resources/fundamentals-exams-study-resources/f1/technical- articles/question-of-ethics.html

• http://www.cimaglobal.com/Professional-ethics/Ethics/CIMAs-code-

at-a-glance/

Enron’s Values Statement, included in 2000 annual report:

• Excellence
• Communication
• Respect
• Integrity

Thank you

And

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