Chapt.15 -Business Ethics And Ethical Behavior

1. Definition of business ethics
Ethics is the analysis of right and wrong, and associated responsibility.Business ethics is the application of ethical values to business behaviour.

Approaches to deciding what is right and wrong includes:
Consequences - the end justifies the means
Motivation of the parties concerned
Guiding principles - treat others as you would like to be treated
Duties - based on religious codes
Key values - importance of human rights

These are often, but not always incorporated into legislation.

2. Why business ethics is important
For the organization
-good ethics should be seen as a driver of profitability
-an ethic framework is part of good corporate governance
-investors are reassured about the risk management
-employees will be motivated in the knowledge

For the individual
-consumer and employee expectations have evolved over recent years
-consumers may choose to purchase ethical items
-employees will not blindly accept orders to act in a manner

3. How can the ethics of business decision be judged?
Ethics goes beyond the legal requirements of business, if an action is illegal, it is almost certainly unethical. There is no universal code of conduct that provides guidance on how a business should conduct itself.

The criteria to be used
- legal ?
- contrary to our company’s adopted code of ethics?
-contrary to any other published official code of ethics
- mind others knowing what you have decided?
- who is affected by this decision

4. How is a profession distinguished from other occupations?
A profession is characterized by
-the mastering of specialized skills
-governance by a professional association
-compliance with an ethical code
-a process of certification

5. The Accountants Role In Promoting Ethical Behaviour:
At the top management level, the professional accountant is the only person who belongs to a profession. Therefore has a duty to act in the interest of the organization. The accountant should conduct himself with courtesy and consideration towards clients and colleagues. They also should not forget that they have a public duty in order to promote ethical behavior throughout the business.

6. Codes Of Ethic And Codes of Conduct:
Most of the companies have approached the business with a set of internal policies or rules in order to enhance the business ethical issues. These rules or policies are regulating throughout the business by instructing the employees to follow them and appointing ethical officers to monitor the policies. These policies can either be called as a corporate ethic statement or a corporate ethic code.

7. IFAC AND ACCA Code Of Ethics:
Both the IFAC and the ACCA have developed code of ethics for their members. The IFAC ‘code of ethic for professional Accountants’ lays down ethical standards to be applied by practicing accountants across the world.

The ACCA’s code of ethic and conduct is published in the annual Rulebook issued by the association. These codes are based on the IFAC code and take similar conceptual frame work.

IFAC and ACCA’s codes of ethics fundamental principles are

Integrity
Objectivity
Professional competence and due care
Confidentiality
Professional behaviour