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GOVERNANCE Chapter 3 Group 6

The document discusses the importance of ethics in business, defining ethics as belief systems that guide behavior and emphasizing the role of corporate social responsibility (CSR). It outlines the application of business ethics to promote a culture of legality and morality within organizations, highlighting the negative impacts of unethical behavior on various stakeholders. Additionally, it details the components of a code of ethical conduct and the process for resolving ethical issues in accounting.

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Meg Sunday Javier
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1 views13 pages

GOVERNANCE Chapter 3 Group 6

The document discusses the importance of ethics in business, defining ethics as belief systems that guide behavior and emphasizing the role of corporate social responsibility (CSR). It outlines the application of business ethics to promote a culture of legality and morality within organizations, highlighting the negative impacts of unethical behavior on various stakeholders. Additionally, it details the components of a code of ethical conduct and the process for resolving ethical issues in accounting.

Uploaded by

Meg Sunday Javier
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 PDF, TXT or read online on Scribd
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APPLYING

ETHICS IN
BUSINESS
CHAPTER 3
ETHICS
Derived from the Greek word “ethos”.
Belief systems and actions that guide people on
how to live their lives as they relate to other people
around them.
It deals with truthfulness, justice, moral duties,
and obligations.
Includes what is good to other and avoiding what is
not good.
ETHICS
Understanding what is “right” and “wrong” can
come from different sources, such as:
1. Religion or Spiritual beliefs;
2. Influence of family and friends;
3. Ethnic background;
4. Social upbringing;
5. Media (e.g., internet, TV, radio); and
6. Personal role models
CORPORATE SOCIAL
RESPONSIBILITY / CSR
It is concerned with the responsibilities and
obligations of businesses to people,
communities, and the society around them.
It is no longer a mere avenue for enhancing
corporate image, but for attaining
competitive edge in today’s highly
competitive business environment.
BUSINESS ETHICS
The application of ethical principles
and standards in a business
environment.
It is a broad discipline that attempts to
address improper attitudes and
actions that could be detrimental to the
company.
However, business ethics is not
confined to the prevention of fraud or
other irregularities.
BUSINESS ETHICS
It seeks to achieve a corporate culture
that drives people in the company to do
things legally and ethically.
Without business ethics, the
stakeholders will be negatively
affected because their interests and
concerns will not be met.
Shareholders Community Government
Decline in revenue, Lack of corporate support Insufficient tax collections
profits, and cash flows to the community Increase in violations of
Decline in stock price Lack of job opportunities laws and regulations
Corporate bankruptcy Destruction of the local
environment

Employees Vendors
Loss of employment Delayed payments for
Job dissatisfaction and NEGATIVE IMPACT OF UNETHICAL goods received
demoralized workforce ACTS TO STAKEHOLDERS Kickback and bribery
Insufficient personal
income

Creditors Customers
Inability to collect loan Substandard and unsafe
principal and interest from products
the company Exorbitant prices of
Poor credit rating of the products
borrower-company Customer dissatisfaction
ILLEGAL ACTS
Are actions of the corporation, as well as its corporate officers and
employees that are contrary to prevailing laws and government.
It necessarily carry monetary fines and penalties to the company and
guilty individuals.
Examples:
Tax Evasion Money Cybercrimes Patent
laundering infringement

Violation of labor Violation of Insider trading


and social environmental
security laws laws
COMMUNICATION OF THE CODE OF
ETHICAL CONDUCT
Before implementing the company’s code of conduct, it
must be communicated first to all interested
stakeholders.
The manner of communicating the ethical code is
ordinarily done through the following modes:
Employee orientation programs;
Posting in the company website;
Newsletters and publications;
Bulletins;
Official memoranda; and
Employee manual
EXAMPLES OF UNETHICAL ACTS IN
VARIOUS COMPANY DEPARTMENTS
MARKETING - Making a false INTERNAL AUDIT - Not reporting of
representation or improper claim audit findings to the audit committee.
about the features of a product
PRODUCTION - Temporary patching PROCUREMENT - Procurement
of a defective product and hiding the manager buys materials needed from
product defect. his/her own trading firm at a high cost.
RESEARCH AND DEVELOPMENT - ACCOUNTING - Understating the
Divulging confidential information on bad debts expense to show high net
the ingredients of a product. income.
HUMAN RESOURCE - Falsifying BOD / SENIOR MANAGEMENT -
employee competence and Approving a major project on which
qualifications. they have a commission.
CODE OF ETHICAL CONDUCT
It must be tailor-fitted to the company’s nature of business, industry,
size, products, services, and other factors.
The following are the major contents of the code of ethical conduct:
1. Company profile
2. Objectives of the code of ethical conduct
3. Ethical principles adapted by the company
4. List of instances of unethical acts
5. Process for identifying the threats or risks of unethical acts
6. Process for determining whether the threats are significant.
7. Resolving ethical conflicts.
8. Reporting of ethical issues and concerns.
9. Sanctions for violations of the code of ethical conduct.
10. Approval of the code of ethical conduct.
CODE OF ETHICAL CONDUCT
The following specific unethical behaviors and unethical actions are also
reflected and prohibited in the code of ethical conduct:
1. Divulging of confidential information and trade secrets
2. Personal use of company vehicles and equipment
3. Unauthorized commissions and consulting fees
4. Conflicts of interests and outside business of officers and employees
5. Reimbursement of personal expenses
6. Prohibition on bribery
RESOLUTION OF ETHICAL ISSUES
IN THE FIELD OF ACCOUNTING
A behavior or an act that is expressly prohibited in the company’s code of
ethical conduct is outright unethical.
However, if not expressly prohibited, the following steps may serve as
guides in the resolution of ethical issues:
1. Identify the facts
2. Identify the ethical issue
3. Analyze the alternative course of action
4. Make a decision

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