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Ethics Audit and Risk Assessments

The document discusses various types of audits and assessments that companies conduct related to ethics, sustainability, and risk, including ethics audits, sustainability audits, and fraud risk assessments. It also discusses the importance of transparency in improving ethics programs. Behavioral ethics helps understand psychological tendencies that can influence ethical decision making, such as conformity bias, overconfidence bias, self-serving bias, and framing. Ethical issues can arise at the personal, organizational, and industry levels. Types of ethical theories include teleological, deontological, and aretaic theories. Principles of ethics discussed include utilitarianism, rights, and justice.

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Kelvin Jay Sebastian Sapla
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98 views2 pages

Ethics Audit and Risk Assessments

The document discusses various types of audits and assessments that companies conduct related to ethics, sustainability, and risk, including ethics audits, sustainability audits, and fraud risk assessments. It also discusses the importance of transparency in improving ethics programs. Behavioral ethics helps understand psychological tendencies that can influence ethical decision making, such as conformity bias, overconfidence bias, self-serving bias, and framing. Ethical issues can arise at the personal, organizational, and industry levels. Types of ethical theories include teleological, deontological, and aretaic theories. Principles of ethics discussed include utilitarianism, rights, and justice.

Uploaded by

Kelvin Jay Sebastian Sapla
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Ethics Audit and Risk Assessments

Ethics Audits- are mechanisms or approaches by which a company may assess or evaluate its ethical climate or
programs.
Sustainability Audit- A popular variation on the ethics audit.
Fraud Risk Assessments- are review processes designed to identify and monitor conditions and events that may have
some bearing on the company’s exposure to compliance/ misconduct risk.

Sustainability Audits becoming popular


Sustainability audits are becoming popular today. In some instances they are done in conjunction with ethics audits.
Sometimes they are done instead of ethics audits. A sustainability audit is assessment of the environmental and or social
aspect of the workplace providing a direction for opportunities and potential risks.
Research carried out by Sustainability Training Advice Review has shown that the organizations seeking to become more
sustainable are adopting a number of key building blocks, including:
1. Identification of sustainability issues within the organization
2. Sustainability performance measurement of trends
3. Stakeholder engagement, linkages and systems thinking
4. Values and community issues
5. Change management processes toward sustainability
6. Vision and the future
7. Governance and sustainability audit
If organizations have these sustainability building blocks, this will give a good indication of how the organization is
integrating sustainability thinking into activities.

Corporate transparency
Transparency- one of the most important best practices in the improvement of ethics programs.
Corporate transparency- refers to a quality, characteristic, or state in which activities, processes, practices, and
decisions that take place in companies become open or visible to the outside world. A common definition of
transparency is the to which an organization
 Provides publics access to information
 Accepts responsibility for its actions
 Make decisions more openly
 Establishes incentives for leaders to uphold these standards
Opacity- opposite of transparency, or an opaque in which activities and practices remain obscure or hidden from
outside scrutiny and review.

Behavioral Ethics – Striving Toward a deeper understanding


Behavioral ethics- helps us understand, at a deeper level, many of the behavioral processes that research has shown
and actually taking place in people and organization.
Bounded Ethicality- tends to occur when managers and employees find that even when they aspire to behave
ethically, it is difficult due to a variety of organizational pressures and psychological tendencies that intervene.
Conformity bias- tendency when people have to take their cues for ethical behavior from their peers than exercising
their own independent ethical judgment.
Overconfidence bias- tendency from people to be more confident of their own moral character or behavior than they
have the objective reason to be.
Self-serving bias- is similar; this is the propensity people have to process information in a way that serves to support
their preexisting beliefs and their perceived self-interest.
Framing- refers to the fact that people’s ethical judgments are affected by how a question or issue is posed.
Incrementalism- is the predisposition toward the slippery slope.
Role morality- tendency some people have to use different ethical standards as they move through different roles in
life.
Moral Equilibrium- This is the tendency for people to keep an ethical scoreboard in their heads and use this
information when making future decisions.
ETHICAL ISSUES ARISE AT DIFFERENT LEVELS
1. Personal Level- These challenges include situations we face in our personal lives that are generally outside the
context of our employement.
Questions or dilemmas that we might face at the personal level include the following:
 Should I cheat on my income tax return by overinflating my charitable contributions?
 Should I tell the professor I need this course to graduate this semester when I really don’t?
 Should I download music form the Internet although I realize it is someone else’s intellectual property?
 Should I connect this TV cable in my new apartment and not tell the cable company?
2. Organizational Level- Many of these issues are similar to those we face personally. However, organizational-
level issues carry consequences for the company’s reputation and success in the community and also for the
kind of ethical environment or culture that will prevail on a day to day basis at office.
 Should I set high production goals for my work team to benefit the organization, even though I know it
may cause them to cut corners to achieve such goals?
 Should I over report that actual time I worked on this project, hoping to get overtime pay?
 Should I authorize a subordinate to violate company policy so that we can close the deal and be
rewarded by month’s end?
 Should I misrepresent the warranty time on a product in order to get the dale?
3. Industry or Profession Level- The industry might be stock brokerage, real estate, insurance, manufactured
homes, financial services, telemarketing, electronics, or a host of others.
 Is this safety standard we electrical engineers have passed really adequate for protecting the consumer
in this age of do-it-yourselves?
 Is this standard contract we mobile home sellers have adopted really in keeping with the financial
disclosure laws that have recently been strengthened?
 Is it ethical for telemarketers to make cold calls to prospective clients during the dinner hour when we
suspect they will be at home?
Types of Ethical Principles or theories
1. Teleological theories- focus on the consequences or results of the actions they produce.
2. Deontological theories- by contrast, focus on duties.
3. Aretaic theories- less-known category of ethics, put forth by Aristotle.
4. Principle of Utilitarianism- “We should always act so as to produce the greatest ratio of good to evil for
everyone”
Principle of Rights- rights cannot simply be overridden by utility, but only by another, more basic or important right
1. Moral rights- are important, justifiable claims or entitlements.
2. Negative right- is the right to be left alone. It is the right to think and act free from the coercion of others.
3. Positive right- is the right to something, such as the right to food, to health care and clean air.
Principle of Justice-
1. Distributive justice- refers to distribution of benefits and burdens in societies and organizations.
2. Compensatory justice- involves compensating someone for a past injustice.
3. Procedural justice- refer to fair decision making procedures, practices or agreements.

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