Question

Could internal controls have been utilized to produce more ethical behavior? Would a plan by corporate governance be an appropriate vehicle for delivering these internal controls to encourage ethical behavior? Discuss.

500 words

Answer 1

Yes, the internal controls can be utilized to produce more ethical behavior. As the internal controls states that the making of procedure and the various policies by the management towards the appropriate behavior of the employees towards their jobs, the company’s assets, the other employees, the clients and the society at large are the biggest guidance towards the Ethical Behaviors. The internal controls not only places the procedures and policies but also keep a eye on the behaviors and ethical conducts of officials and the employees. The internal control creates a environment of movement of the activities in a controlled pattern. Any kind of diversion will be spotted by the internal control department to the management and appropriate action towards the stopping and rectifying the same.

The effective ethical behavior can be extracted out of the procedures and policies so formed and executed by the management through the Internal Control departments only. Once the ethical path is defined and placed for the execution in the employees field, it will be essential to know that the employees are observing the plans of the management or not. The investigation and rectification part is being played by the Internal Control department. The frauds and the misappropriation and misbehavior towards the employee, company’s assets and clients will be the unethical points which are traced out by the internal controls of the company. The desired changes as per the requirements of the situation in the procedures and policies are suggested by the internal control department to the management, so that proper ethical module will be framed for the company.

The ethics manual as placed by the management in the employees/key official domain says about the responsibilities and limit out the various authorities of the different employees. The internal control of the company assesses the employees’ execution of these responsibilities and utilization of the authorities and evaluates the effect of the same on the company’s performance and results.

The internal control department keeps on refreshing the ethical procedures and policies, now and then, towards behavior to the officers and employees of the company. This will help the management and the officers to up-date the right behaviors towards various activities and stop them the unethical activities which would crop up by the passage of time.

Thus, the internal controls are the right gateway to the management towards bringing the ethical behavior among the officers and employees of the company.

========================