Chapter 8 Ethics and Compliance Programs

What are some of the materials and formats typically used by firms in ethics training.

- Lectures - Videos - CDs - Interactive CDs - Simulations - Games - Cases - Brief scenarios - Manuals - Web based materials

What are some of the ways that Codes vary?

- Their Focus - Level of Detail - Thematic Content and Tone

Why establish a compliance program?

-- Rules and regulations require it (for example - Sarbanes-Oxley Act Sections 301, 406 and related SEC rules regarding audit committee complaint procedures and codes of ethics) -- Federal sentencing guidelines and federal prosecutors/regulators advise it -- It's the right thing to do -- It's good business

What are some of the frequently addressed topics in Corporate Codes of Conduct?

1. Conflicts of Interest 2. Protecting Proprietary information 3. Receiving gifts 4. Giving gifts 5. Discrimination 6. Sexual Harassment 7. Kickbacks 8. General conduct 9. Employee theft 10. Proper use of assets

What are the Six Steps in Implementing a Code of Ethics?

1. Distribute Internally and Externally 2. Assist employees in understanding 3. Specify Management's role 4. Make employees responsible for understanding the code 5. Establish Grievance procedures 6. Provide a concluding statement

Some companies provide a toll free number for ethics inquiries where employees can call about what topics?

1. Interpretation of or guidance on company policy 2. General ethics questions 3. code of conduct issues 4. Workplace harassment/discrimination 5. Selling practices 6. Theft

An effective compliance program prevents corporate wrongdoing and thus offers these three benefits?

1. Protects the company, directors, and officers from litigation, be it criminal/regulatory/civil 2. Helps maintain the company's long term reputation 3. Helps recruit and retain employees; they have come to expect an effective compliance program

What are the Four Steps in Xerox's Complaint Resolution Process?

1. Receives/Examines complaints 2. A team (senior mngt, legal counsel, HR) conducts an examination 3. Management's review of the team's report 4. Resolution

What are the eight ways or "themes" on how codes influence behavior within an Organization?

1. Rule Book 2. Sign Post 3. Mirror 4. Magnifying glass 5. Shield 6. Smoke Detector 7. Fire Alarm 8. Club

What are the goals of Ethics training?

1. To learn Fundamentals of Business Ethics 2. Solve ethical dilemmas 3. Identify causes of unethical behavior 4. Learn about common managerial ethical issues 5. Learn whistle blowing criteria and risks 6. Learn to develop a code of ethics

What does it mean when codes of conduct act as a Shield?

Allows employee to better challenge and resist unethical request

What does Opacity mean?

An Opaque condition in which activities and practices remain obscure and hidden from outside scrutiny and review (opposite of transparency)

An effective ethical culture is contingent on employees having a mechanism for reporting violations or blowing the whistle, what is the most common way?

An ethics hotline

An effective compliance program is a good management tool to what?

Anticipate and Ameliorate risk

Management has the responsibility for establishing standards of behavior and for effectively communicating those standards, this is done through establishing what?

Codes of Conduct

When proper developed, administered, and communicated ____ __ ______ serve to raise the level of ethical behavior in the organization by clarifying what is meant by ethical conduct, encouraging moral behaviors and establishes a standard by which accountability may be measured

Codes of Conduct

Managers must ___________ _____________ of its accepted ethical norms and standards to bring about an ethical climate

Discipline Violators

What does it mean when codes of conduct act as a Mirror?

Employee confirms whether their behavior is acceptable or not

What does it mean when codes of conduct act as a Magnifying Glass?

Employee sees caution to be more careful or engage in greater reflection before acting

What does it mean when codes of conduct act as a Sign Post?

Employees consult others to determine appropriate behavior

what is a way that companies can follow up on their ethics initiatives and programs?

Ethics Audits

What is Corporate Compliance?

Internal policies and procedures designed to prevent and detect violations of applicable law, regulations, rules and ethical standards by employees, agents and others A program designed to create a culture of compliance and ethical business conduct

What is the description of a "Value Based Ethics Program" from the video?

It is directed toward aspirations, its positive, and conveys "who" the company is trying to be

What is the description of a "Compliance Based Ethics Program" from the video?

It is more about complying with rules, has an emphasis on consequences.

What is Corporate Transparency?

It refers to a quality, characteristic, or state in which activities, processes, practices and decisions t hat take place in companies become open or visible to the outside world

What does it mean when codes of conduct act as a Fire Alarm?

Leads employees to contact appropriate authorities and reports violations

What does it mean when codes of conduct act as a Smoke Detector?

Leads employees to convince others and warn them of their inappropriate behavior

Are Value and Compliance Based Ethics programs Mutually Exclusive?

NO. Most good ethics programs have a combination of the aspiration, but they also hold employees accountable.

What is a recent example of Disciplining Violators of Ethical Standards?

Nortel Networks fired its CEO, CFO and Controller for their involvement in accounting problems that had been under scrutiny. As a result the company had to restate earnings.

What does it mean when codes of conduct act as a Club?

Potential enforcement of code causes employees to comply with code provisions

What is the major reason the public and employees have questioned business's sincerity in desiring a more ethical environment?

The unwillingness of businesses to discipline violators

What is one problem that frequently leads to the covering up of unethical acts by people in organizations?

They don't know how to respond when they observe a questionable practice.

One of the most recent best practices in the improvement of ethics programs is?

Transparency

Is Code of Conduct Training required?

Yes, current regulatory requirements require code of conduct training 68% of companies currently have a formal Code of Conduct training

what is the purpose of an ethics hotline?

an employee can phone in their inquiries about the company's code of ethics or report suspected wrongdoing

What is a sustainability audit?

it is used for identifying and managing sustainability issues

What does it mean when codes of conduct act as a Rule Book?

it is what behavior is Expected of Employee

Sarbanes Oxley Act mandated greater transparency due to what?

recent business scandals

How is the effectiveness of codes of conduct shown?

the relationship between corporate codes and employee behavior in the workplace

What is the purpose of Ethics Audits?

they are intended to carefully review such ethics initiatives as ethics programs, codes of conduct, hotlines, and ethics training programs

What are Ethics Audits?

they are mechanisms or approaches by which a company may assess or evaluate its ethical climate or programs

What is Fraud Risk Assessments?

they review processes designed to identify and monitor conditions and events that may have some bearing on the company's exposure to compliance/misconduct risk and to review company's methods for dealing with these concerns