1. Chapter 2 Corporate Ethics
Corporate Governance

2. Introduction
Ethical behaviour is behaviour that is seen as morally good or correct by society. In corporate terms, ethics describes the moral responsibilities of a company to its employees, shareholders, other stakeholders and the wider community in which it operates.
Corporate Governance

3. The Importance of Ethics
Ethics provide:
A foundation for a well managed company.
A key method for a company to distinguish itself from the competition in a positive fashion. Can enhance reputation and attract and retain customers and employees.
A reduction in the risk of civil and criminal liability.
Corporate Governance

4. Compliance Gaps
A compliance gap is where a gap exists between actual practises and the required standard under regulation or ethical standards. Compliance gaps will emerge as the corporate and regulatory landscape change. Companies must be vigilant in keeping up with regulatory changes in order to close compliance gaps as quickly as possible.
Corporate Governance

5. The Interaction Between Ethics and Black Letter Law
Ethics go beyond the law, they provide guidance for resolving moral dilemmas. Laws are reactive, prohibiting undesirable behaviour. Ethical standards are proactive, setting standards to which persons should aspire. Ethical standards are self regulated, whereas the law is regulated by the government. Many laws are based on the concepts of ethics and morality in our society.
Corporate Governance

6. Examples of Ethical professional Self-Regulation
Company Directors
The codes of conduct issued by the Australian Institute of Company Directors is an example of Ethical Self regulation.
Members are bound and the code is enforced through disciplinary action, including expulsion from membership.
The code overlaps with legislation, it is intended to go beyond and expand on the legislation.
Corporate Governance

7. Examples of Ethical professional Self-Regulation
2. Accounting Profession
On 1 July 2011 the joint code of professional conduct that applied to the members of Chartered Accountants and CPA Australia was replaced. The new code is called the Code of Ethics for professional Accountants.
Three parts:
Establishes the fundamental principles of professional ethics and conceptual framework to guide the application of those principles.
How the conceptual framework applies to members of public practice.
How the conceptual framework applies to members in business.
Corporate Governance

8. Company Codes of Conduct
The advantages of company codes of conduct include:
Enhancing the company’s reputation for fair and responsible dealing.
Helping to maintain high standards of behaviour throughout the organisation.
Giving all employees a clear idea of what the company is trying to achieve and how it will be done.
Developing pride among staff and giving focus to the organisation as a whole.
Corporate Governance