Business Ethics Implementation/Review

Every organization has an ethics program/strategy, whether explicit or implied. An effective ethics program serves as a basis for policy making as well as providing guidance in daily decision-making. It defines ethics goals and objectives and measures how well the organization is performing in these areas. An organization's ethical values determine what leaders and other employees will view as important and proper. These ingrained ethical values provide direction and consistency in decision-making regardless of any policies or procedures.

Why implement a formal Business Ethics program?

It is good business practice for organizations to implement an effective compliance and ethics program. Such programs will protect shareholders and other key stakeholders by reducing the risk of criminal behavior.

All too often, people assume that others share their ethical values and commitment. In today’s diverse work environment, we have people from all backgrounds and lifestyles in all levels of positions within organizations. Along with this comes an equally diverse interpretation of ethics. Even when we believe there is clear communication on ethical standards, we frequently find that the hearer did not hear or interpret our message in the way we intended.

If you believe in being safe rather than sorry, you should consider implementing a business ethics program. If you have implemented a business ethics program, you should evaluate its effectiveness, especially if all is quiet and there are no calls to your hotline. Do you know the answer to the question, "Are there no violations, or are violations not being reported?"

According to the federal sentencing guidelines, the lack of a formal business ethics program may be perceived as a failure to “exercise due diligence to prevent and detect criminal conduct”. They go on to conclude, “The prior diligence of an organization in seeking to prevent and detect criminal conduct has a direct bearing on the appropriate penalties and probation terms for the organization if it is convicted and sentenced for a criminal offense.”

Value to the Client

An effective business ethics program goes beyond considerations of fraud and develops an ethical culture where employees understand the organizations ethical principles. A culture where employees know that their job is more secure if they report ethical violations and do not fear retribution if they do report suspected ethical violations. This culture reduces the likelihood of your organization being held liable and suffering the reputation damage of a criminal investigation or possible indictment.

You should never assume that no reported ethical issues mean that all is well. An independent review can highlight gaps and areas for increased communication and training.

Why hire M&A?

M&A has a proven methodology for the implementation and review of a business ethics program. Our staff is skilled in the areas of facilitation, analysis, communication, and training necessary to implement and assess your business ethics program. We work with your staff to transfer knowledge so that you can take ownership of your sustainable business ethics program.

"Even a correct decision is wrong when it was taken too late." Lee Iacocca

Contact the M&A Risk Management Services Team at ENissley@macpas.com for more details, and subscribe to The RMC Advisors blog at www.theRMCadvisors.com to receive updates on relevant accounting and audit information!