SCHOOL OF BUSINESS ADMINISTRATION Business & Society ETLW 302D Tara Ceranic Salinas, PhD

SCHOOL OF BUSINESS ADMINISTRATION Codes of Ethics

SCHOOL OF BUSINESS ADMINISTRATION Foundation of a strong culture? Ethical leaders! “In thought, word and deed, a company’s leaders must clearly and unambiguously both advocate and model ethical behavior.” -CEO, Merck What are the traits of an ethical leader? Difference between good and ethical

SCHOOL OF BUSINESS ADMINISTRATION

We can’t assume everyone will be ethical all of the the time so… sometimes you have to regulate.

SCHOOL OF BUSINESS ADMINISTRATION

Sarbanes-Oxley Act 2002 A Public Company Accounting Oversight Board is established. The firms are not permitted to offer loans to its executive officers or board of directors. SEC rules will create guidelines for internal controls and financial reporting procedures. ERISA penalties are increased from $5,000 to $100,000 and one year in prison to $100,000 to $500,000 and up to 10 years in prison.

SCHOOL OF BUSINESS ADMINISTRATION Sarbanes-Oxley Act 2002 The firm’s audit committee is entrusted with auditor oversight and with all independent directors on the committee Certain nonaudit services by auditors to clients are banned, nonaudit services must be preapproved by the audit committee, the lead auditor must be rotated every five years, and auditors report to the audit committee. The CEO and CFO must sign off on financial statements as accurate and fair and must repay bonuses if a restatement of financials is undertaken.

SCHOOL OF BUSINESS ADMINISTRATION U.S Corporate Sentencing Guidelines: Directives Establish standards and procedures to reduce criminal conduct Assign high-level officer(s) responsibility for compliance Not assign discretionary authority to “risky” individuals Enforce standards and procedures through disciplinary mechanisms Following direction of offense, respond appropriately and prevent reoccurrence

SCHOOL OF BUSINESS ADMINISTRATION U.S Corporate Sentencing Guidelines Effectively communicate standards and procedures through training Take reasonable steps to ensure compliance-monitor and audit systems, maintain and publicize reporting systems

SCHOOL OF BUSINESS ADMINISTRATION Codes of ethics exist in each of your chosen fields: -Accounting (AICPA, IFAC, Code of Ethics for Professional Accountants) -Finance (FPA, NAPFA) -Marketing (AMA, BMA) -Information Technology (Association of IT Professionals)

SCHOOL OF BUSINESS ADMINISTRATION You can’t find an ethics code for your organization… Compliance Conduct Governance Mission Vision Values Practices

SCHOOL OF BUSINESS ADMINISTRATION Ethics Codes/Policies in Organizations The code is about corporate culture -What lines can’t be crossed? Get input -From ALL levels Don’t be too specific or too vague

SCHOOL OF BUSINESS ADMINISTRATION Ethics Codes/Policies in Organizations Watch out for pitfalls (things not being addressed) -Nepotism, harassment, discrimination Ask experts (HR, ethicist, lawyer) Put someone in charge -Who applies and updates?

SCHOOL OF BUSINESS ADMINISTRATION What do some actual codes look like? Break into groups Find the code for any organization you are NOT doing your project on What do you think?

SCHOOL OF BUSINESS ADMINISTRATION Other ways to implement ethics in the organization Ethics committees Ethics officers/ombudspersons Hot lines Ethics audits Corporate ethics awards

SCHOOL OF BUSINESS ADMINISTRATION Ethics Training Videos Dupont Canine Conduct

SCHOOL OF BUSINESS ADMINISTRATION Writing your Ethics Analysis paper

SCHOOL OF BUSINESS ADMINISTRATION Next Class Stakeholders