Government, Ethics, And International Business
Degree of Fraud
Can be linked to the control environment of an organization, as described below.
Audit Work
Conducted by two types of individuals, such as external auditors primarily financial and IT audits, and internal auditors primarily conducting operational and IT audits.
Sale
Consists in the passing of title to goods from seller to buyer for a price.
Product Standards
Controls the overall quality of imported goods into a country. These standards include design standards, safety standards, quality standards, health standards, electrical standards, and environmental standards.
Warranty
Creates a duty on the seller's part to ensure that the goods or services sold will conform to certain qualities, characteristics, or conditions.
Identity Theft and Assumption Deterrence Act
Criminalizes identity fraud, making it a federal felony punishable with prison sentences ranging from 3 to 25 years. The FTC helps victims restore their credit and erase the impact of the imposter.
Sherman Antitrust Act of 1890
Curbs business conduct if it unfairly destroys competition in the marketplace. The purpose of the Act was not to protect businesses from the working of the market efficiencies, but to protect the public (consumers) from the failure of the market efficiencies.
Property Law
Deals with all aspects of ownership and possession of both tangible things and intangible rights (such as leases and mortgages).
Law of Agency
Deals with business duties, relationships, and obligations between a principal and his agent.
Computer Fraud and Abuse Act
Deals with computers used in interstate commerce and makes altering, damaging, or destroying information; stealing passwords; and introducing viruses and worms into computers crimes (and potentially fraud).
Securities Exchange Act of 1934
Deals with trading in already issued securities (secondary transactions). These secondary transactions greatly exceed in volume and value of the original offerings as primary transactions.
Uniform Commercial Code (the Code, or UCC)
Defines goods and products as tangible personal property. Personal property is any property other than an interest in real property (land and any attachments to it such as buildings).
Securities Act of 1933
Focuses on the issuance of original investment securities (primary transactions). The Act mainly focuses on information provided to investors to prohibit misrepresentation and deceit.
Due Process
Following rules and principles so that an individual is treated fairly and uniformly at all times with basic rights protected. It also means fair and equitable treatment to all concerned parties so that no person is deprived of life, liberty, or property without due process of the law, which is the right to notice and a hearing.
Tariff Barriers
Normal import duties or taxes imposed on goods entering the customs territory of a nation.
Apparent Authority
Occurs based on the principal's words or conduct, not by contract. This authority cannot be denied if third parties relied on it. This is based on impressions of the third parties.
Express Authority
This comes from the actual authority through a written job appointment of an agent by a principal. This appointment document details the agent's duties and responsibilities. The principal is bound to this authority.
Actual Authority
This comes from the fully executed contract between the principal and the agent. The principal is bound to this authority.
Compliance Costs
A combination of cost of planning, cost of hiring, cost of training, cost of subject matter expert consulting, cost of implementation, cost of reporting, and cost of continuous monitoring.
Personal and Business Bankruptcy Codes
A basic liquidation plan for individuals and businesses. Also known as straight bankruptcy, it's the simplest and quickest type of bankruptcy available.
Contract
A binding agreement between two or more parties that the courts will enforce.
Non-compliance Costs
A combination of government fines and penalties; legal fees; court filing costs; case preparation costs; legal expert consulting fees; non-quantified loss of image and reputation costs resulting from negative publicity in news media and public's rejection of purchase and use of the affected company's products and services (lost sales); and imprisonment of officers involved in criminal acts.
Bankruptcy
A debtor declares this to obtain relief from debt, either through a discharge of the debt or through a restructuring of the debt.
Fraud
A deception, misstatement, or falsehood used to cheat another party.
Compensatory Damage
A direct and actual damage paid to compensate the claimant (victim) for loss suffered as a result of another party's breach of duty. The goal is to make the victim whole.
Wagner Act of 1935
A fundamental turnaround in government's attitudes toward labor relations. The Act is known as a pro-union (pro employee) act.
Ethics Committee/Ethics Office
A group of executives appointed to oversee company ethics. The committee provides rulings on questionable ethical issues and assumes responsibility for disciplining wrongdoers.
Product Liability
A liability of manufacturers and distributors for defective products that cause injury and death to consumers, resulting from the use of unsafe products. It focuses on negligence and strict liability.
Auditing
A management control mechanism that examines and verifies evidence to reach conclusions and issue a professional opinion
Ethics Ombudsperson
A manager serving as the corporate conscience. This manager will listen to employee grievances, investigate ethical complaints, and point out employee concerns and possible ethical abuses to top management
Punitive Damage
A non- compensatory damage that may be awarded to a plaintiff in order to deter a defendant. .
Patent
A property right for an invention granted by the government to the inventor. This gives the owner the right to exclude others from making, using, and selling devices that embody the claimed invention.
Boycott
A refusal from a particular country to trade or do business with certain companies or an entire country on political grounds, economic grounds, or other grounds.
Quota
A restriction imposed by law on the numbers or quantities of goods, or of a particular type of good, allowed to be imported.
Contract Law
Addresses agreements between two parties (such as sales of goods and consumer protection).
Tort Law
Addresses wrongs other than a breach of contract, by which one party injures another (such as slander, libel, and product liability).
Liquidating Damage
An estimate of damage stated in advance in a contract in case of a breach as long as the damage amount was estimated in good faith.
Consequential Damage
An indirect and special damage awarded due to loss of product or service, loss of profits, or loss of operating revenue if the court decides that such damages are reasonable, foreseeable, or expected of the parties at the time of contract formation.
Principal
An individual, a group of individuals, or a company that hires an individual (agent) to sell the principal's goods or services to customers with a fully executed contract.
Labor Union
An organization dedicated to protecting workers when negotiating with employers in areas such as pay, hours, and working conditions.
Trade Secret
Any information that the owner has taken reasonable measures to keep secret and that has an independent economic value (that is, keeping the secret is essential to making money).
Control
Any positive or negative action taken by management that would result in accomplishment of the organization's goals, objectives, and mission.
Accounting Controls
Are defined with a body of professional standards published by accounting authorities. They help ensure there's full accountability for physical assets and that all financial transactions are recorded and reported in a timely and accurate manner.
Administrative Law
Describes the legal principles that apply to government agencies, bureaus, boards, and regulatory commissions.
Codes of Conduct or Code of Ethics
Documents state the values or behaviors that are expected as well as those that will not be tolerated.
Criminal Law
Encompasses all legal aspects of crime. In each of these areas, society, or "the people," is directly involved in the issues.
Private Law
Encompasses those legal problems and relationships that exist between individuals, as contrasted with those in which society is involved. Traditionally separated into the law of contracts, the law of torts, and the law of property.
Three goals of the US antitrust laws:
Ensure free and fair competition in the marketplace Prohibit anticompetitive practices such as price fixing, deceptive pricing, price discrimination, and promotional pricing Prevent unreasonable concentration of economic power that can weaken competition.
Training Programs
Ensures that ethical issues are considered in daily decision making, companies can supplement a written code of ethics with employee training programs.
Full Financial Disclosure
Executives, directors, consultants, and contractors working in private and public sectors are required to disclose their full financial information when they are applying for a higher office. This information includes reporting on stocks and bonds that they hold in the company. They also need to disclose any other conflicts of interest situations that can impair their independence and objectivity, such as working for a competing firm.
Duty of Loyalty
Expected of the board of directors and officers of a corporation; they have a duty not to act adversely to the interests of the corporation and to subordinate their personal interests to those of the corporation and its shareholders.
Equal Employment Opportunity Commission (EEOC).
Handles affirmative action plans and reverse discrimination issues.
Administrative Controls
Helps ensure resources are safeguarded against waste, loss, fraud, abuse, and misappropriation, and support the accomplishment of organization's goals and objectives.
Sources of Personal Ethics
Include a person's beliefs and values, ethical decision framework, and moral development. This addresses how an individual working for a company behaves, based on his or her upbringing from childhood, moral reasoning and principles, beliefs, values, family and religious background, and formal education.
Operational Audits
Include construction audit, quality audit, due diligence audit, security audit, safety audit, privacy audit, and performance audit.
Sources of Business Ethics
Include organization culture, which shapes the overall framework of values within the organization. Corporate culture can embrace the ethical values needed for business success.
Management Controls
Include the plan of organization, methods, and procedures adopted by management to ensure that its goals and objectives are met.
Ethical Responsibilities
Include things such as avoid questionable practices (such as bribes and kickbacks); respond to spirit as well as letter of law; assume law is a floor on behavior; operate above the minimum required; do what is right, fair, and just; and assert ethical leadership.
Philanthropic Responsibilities
Include things such as be a good corporate citizen; make corporate contributions; provide programs supporting community (for example, education, health and human services, culture, arts, and civic duties); and provide for community development and betterment on a voluntary basis.
Economic Responsibilities
Include things such as be profitable; maximize sales; minimize costs; make sound strategic decisions; and be attentive to dividend policy.
Legal Responsibilities
Include things such as obey all laws and adhere to all regulations; obey the US Foreign Corrupt Practices Act; fulfill all contractual obligations; and honor all warranties and guarantees.
Contract for Sale
Includes both a present sale of goods and a contract to sell goods at a future time.
Public Law
Includes constitutional law, administrative law, and criminal law. Provides a major portion of the legal environment of business.
Lobbyists
Individuals representing a specific industry or interest group who persuade legislators or government agencies to act in favor of the group's interests.
Constitutional Law
Involves the interpretation and application of either the federal or a state constitution (such as freedom of speech protected by the First Amendment).
CSPS Aids Consumers by:
It protects the public against unreasonable risks of injury associated with consumer products. It assists consumers in evaluating the safety of consumer products. It develops uniform safety standards for consumer products and to minimize conflicting state and local regulations. It promotes research and investigation into the causes and prevention of product-related deaths, illnesses, and injuries.
Employee Protection
Laws are aimed to provide a limited right not to be unfairly dismissed from the job, a right to a safe and healthy workplace, compensation for injuries sustained in the workplace, and financial security upon retirement or loss of employment.
Celler Antimerger Act of 1950
Makes it illegal for a corporation to acquire the assets and stocks of a competing corporation if the effect is to greatly reduce competition or to tend to create a monopoly.
Robinson-Patman Act of 1936
Prohibits price discrimination, where a seller charges one buyer more than another for the same product. It makes it unlawful for sellers to grant concessions to buyers unless concessions are granted to all buyers on terms that are proportionally equal. The Act reaches the quantity discount, a major form of price discrimination
Clayton Act of 1914
Prohibits the use of exclusive or tying contracts when their use "substantially lessens competition or tends to create a monopoly." Exclusive or tying contracts are contracts in which the seller agrees to sell a product to a buyer on the condition that the buyer won't purchase products from the seller's competitors.
Whistle-blower Protection Laws
Protections for employees who complain about violations of the law by their employers.
Trademarks and Service marks
Protects a commercial identity or brand used to identify a product or service to consumers. The government defines a trademark as "any word, name, symbol, or device used by a person to identify and distinguish his or her goods."
Fair Labor Standards Act (FLSA)
Protects compensation in the form of minimum wage to both private and public sector employees. The Act establishes a minimum wage floor, discourages oppressive use of child labor (under the age of 16), and encourages limits on the number of weekly hours employees can work through overtime provisions.
Federal Trade Commission (FTC)
Protects consumers by stopping unfair, deceptive, or fraudulent practices in the marketplace. Regarding competition, this challenges anti competitive mergers and business practices that could harm consumers, resulting in higher prices, lower quality, fewer choices, or reduced rates of innovation.
Occupational Safety and Health Act (OSHA)
Protects every working man or woman safe and healthful working conditions. Every employer engaged in commerce who has one or more employees is covered by the Act.
Environmental Protection Agency (EPA)
Protects human health an the environment.
Copyrights
Protects the physical expression of an idea, but not the idea itself. Legal protection exists as soon as the work is expressed in tangible form and registered properly.
US SAFE WEB Act
Purpose is to protect consumers from spam, spyware, and Internet fraud and deception.
Due Care
Reasonable care that promotes the common good. It involves maintaining minimal and customary practices.
Taft-Hartley Act of 1947
Regulates a wide range of employer-employee conduct. The Act is known as a pro-management (pro-employer) act.
Electronic Communications Privacy Act (ECPA)
Regulates how the government can obtain stored account information from network service providers, such as Internet service providers (ISPs), telephone companies, cell phone service providers, and satellite services.
US Federal Communications Commission (FCC)
Regulates interstate and international communications by radio, television, wire, satellite, and cable industries, including mergers and acquisitions in those industries.
Controlling the Assault of Non-Solicited Pornography and Marketing Act (CAN-SPAM Act)
Regulates the amount of unsolicited commercial emails and applies to marketers using emails as a marketing medium. The Act prohibits false or misleading subject lines and requires that "from" lines identify the message initiator.
Chapter 11 Code
Rehabilitation or reorganization plan, used primarily by businesses debtors, but sometimes used by individuals with substantial debts and assets.
Personal Bankruptcy Code
Rehabilitation with a payment for individuals with a regular source of income. This Code enables individuals to develop a plan to pay all or parts of their debt.
Duties of a Principal
Require duty to compensate an agent, duty to reimburse the agent, duty to indemnify the agent, and duty to cooperate with the agent.
Notification and Federal Employee Anti- Discrimination and Retaliation Act of 2001 (No FEAR Act)
Requires agencies to notify employees of the rights and protections available to them under the anti-discrimination and whistle-blower statutes in writing and to post this information on their Internet sites.
Duties of an Agent
Requires duty of performance to a principal, duty of notification to the principal, and duty of accountability to the principal. In addition, an agent should not involve in self-dealing, compete with the principal, or misuse confidential information
Due Diligence
Requires organizations to implement an effective system of controls, policies, and procedures to prevent and detect violation of policies and laws.
Golden Rule
States putting oneself in others' shoes. It includes not knowingly doing harm to others.
Prudent Person Concept
States that a prudent person, who is not infallible or perfect, has the ability to govern and discipline himself by the use of reason, does not neglect his duty, and applies his knowledge, skills, and sound judgment in the use of organization's resources.
Professional Principle
States that a true professional will do things in such a way that he can explain them before a committee of peer professionals.
Might-Equals-Right Principle
States that justice is defined as the interest of the stronger, meaning that stronger people have an upper hand over the weaker people.
Goal Congruence Principle
States that the employee needs should be subordinated to the greater good of their employer. An employee should ask himself whether his goals are consistent with the organization's goals.
Means-End Cycle
States that when the end result is of greatest importance, unscrupulous means may be used to reach the end result.
Securities and Exchange Commission (SEC)
Takes responsibility for enforcing the federal statutes, rules, and regulations addressing investment securities.
Operational Controls
The day-to-day procedures and mechanisms used to control operational activities to ensure that they are carried out effectively and efficiently. They also address computer security methods focusing on mechanisms primarily implemented and executed by people and computer systems.
Embargo
The most restrictive non-tariff barrier, often resulting from political actions. It's a total or near total ban on trade with a particular country, sometimes enforced by military action and usually imposed for political purposes.
Ethics
The study of what actions are acceptable and unacceptable to a society. Applied to business, this determines how a company should set up and apply its business practices.
Consumer Product Safety Commission (CPSC)
enforces the Consumer Product Safety Act of 1972 which covers safety of any consumer product not addressed by other regulatory agencies.