Question

Respond to the following in a minimum of 175 words:

This second week we build our understanding of ethical accounting by examining specific cases and effects that demonstrate the importance of fostering an ethical “culture” in a company and its various functions. strategic decision-making. In light of the accounting and budgeting systems we studied last week, consider how the costs involved in business performance and decision-making (Chapters 2 through 5 in our text) are tabulated,

• Discuss the importance of an ethical culture within a company, and how it informs good decisions.
• How would you establish strong integrity and an ethical culture in the accounting function of a company?
• What would the processes, policies, and functions of that department look like?
• How would its integrity be ensured.
• What controls would be necessary or essential?
• Were one to encounter management resistance to complete transparency where ethically required, what steps should be taken?

Answer 1

Organizational ethics are the policies, procedures and culture of doing the right things in the face of difficult and often controversial issues. Ethics topics that challenge organizations include but aren't limited to discrimination, social responsibility and fiduciary issues. Ethics issues and how any organization practices ethics are more important than ever because social media readily exposes issues that might have been swept aside in previous generations.

Many organizations implement compliance and ethics programs to help guide the decision making and behavior of employees. Compliance with regulatory requirements and the organization’s own policies are a critical component of effective risk management. Monitoring and maintaining compliance is not just to keep the regulators happy—it is one of the most important ways for an organization to maintain its ethical health, support its long-term prosperity, and preserve and promote its values.

Three key elements are necessary in order for an ethical corporate culture to be developed and sustained:

1) Ethical leadership as reflected by the board of directors, senior executives, and other managers.The moral tone of an organization is set by its top management because other managers and employees look to the top for information regarding acceptable practices. Top management sets the example, good or bad, for all the others to follow.

2) A set of core ethical values that have been ingrained throughout the organization through policies, processes, and practices that facilitate the display of ethical behavior and reduce the likelihood of misconduct.

3) A formal ethics program that includes a code of ethics, rules, and policies that prescribe appropriate behavior, ethics training, and an ethics officer. Ethics and compliance programs are usually organizational units and people that have been assigned responsibility to monitor and improve ethics in the organization. In a smaller, privately-held organization, the ethics program may be more informal. The owner of the company leads by example, and his or her conduct is the model to be followed by the employees.

Intergrity can be ensured by taking these steps:

1) Mitigate actual conflicts of interest. Regularly communicate with business associates to avoid apparent conflicts of interest. Advise all parties of any potential conflicts of interest.

2) Refrain from engaging in any conduct that would prejudice carrying out duties ethically.

3) Abstain from engaging in or supporting any activity that might discredit the profession.

4) Contribute to a positive ethical culture and place integrity of the profession above personal interests.

The policies, functions and processess should be similar to these actions along with necessary controls mentioned below:

• An organization’s board of directors and management must comply with the organization’s rules. Creating clear boundaries for risks and ethical business standards provides a framework for employees to make the right decisions.
• Character evaluation should be a part of hiring, retention, and promotion practices. Employees need to understand what the organization values from the start, and this should be embedded into the performance evaluation and reward system.
• Leaders should convey, through their actions, that the organization’s reputation and long-term success are more important than short-term gains.
• Leaders should regularly examine complaints by employees and other stakeholders to determine whether the organization’s operations are in alignment with its values.
• Leaders can establish trust through transparency and accountability. They should provide open access to information about strategies and performance, keep their promises and commitments, be open about decision making, accept responsibility for wrongdoing, and reward behavior that supports transparency and truthfulness.

In short, they must lead by example, provide a safe mechanism for reporting violations, and reward integrity. Training can also help instill an ethical culture.

To encounter any management resistance to complete transparency where ethically required, following steps should be taken:

The member should follow established policies of his or her organisation or use any anonymous reporting system if available.

If organisation doesnot have an established policy, following steps should be taken:

1) Should discuss the problem with immediate supervisor. If supervisor is involved, the member to approah the next level of management.

2) Can reach out to the online hotline or whistle- blower where employees can report any improper behavior without any fear of reprisal.

3) If top management is involved, employee can reach out to his attorney.

4) If still these above mentioned steps are of no help, member might consider disassociating with the company.