Business (and) Ethics: All you haven’t known

6th March 2013 – RMIT Vietnam

Agenda

2

3

FCMA

CGMA

FCPA (Aust)

Rick Yvanovich FCMA CGMA FCPA (Aust)

4

7

Our solutions

8

9

Emotional warning

Laugh Cry Anger

Disbelief Horror Relief

Belief Happy Sad

10

Zig Ziglar

People often say that motivation doesn’t last …..

People often say that ETHICS doesn’t last …..

….Well neither does bathing – that’s why we recommend it daily

11

How Ethical are you?

100%

12

How ethical are you? - 1

You have bought something in a store. When you have left

you discover that you have been given the wrong change –

instead of giving you $10 you have been given $20

• Keep the cash

• Or return it to the store

13

How ethical are you? - 1

If you return the money would it be because:

• It is wrong not to return someone else’s money

• It would not be fair to the shop assistant / owner

• You might get found out and prosecuted for theft.

14

How ethical are you? - 2

Do you

• Think first - and Watch the toddler be hit by the car and likely die

• Move first - and Rush out into the road and save the toddler?• Freeze - perhaps unable to do either

What’s this got to do with Ethics ?

15

How Ethical are you? - 3

$ 35 –vs- $ 2

Do you

• Buy the original version• Buy the pirate version• Buy neither• Report the shopkeeper

16

How Ethical are you? - 4

download Music for free

Do you

• Download some great tunes• Not use the site• Report the site

17

How Ethical are you? - 5

You’re applying for your dream job, competition is fierce• You have 35 months instead of 36 months experience the

advert required• You also have that 2 month disaster of a job where you failed

probation

Do you

• Expand your time frame to show 36 months experience• Do not mention that 2 month disaster job

18

How Ethical are you? - 6

You’re a photographerYou’re walking down a street and you snap a few photos of people without asking them

19

How Ethical are you? - 7Marine sniper clutching a shotgun in the Crescent — a rough part of Rochester. Magnum photographer Paolo Pellegrin win honours as Freelance Photographer of the Year

20

Business (and) Ethics

Business Ethics

Ethics

Definition

Business (and) Ethics

21

Ethics defined

What are Ethics ?

22

Ethics defined – Merriam-Webster

top 1% of lookups and is the 51st most popular word on Merriam-Webster.com

a guiding philosophy

the principles of conduct governing an individual or a group <professional ethics>

a set of moral principles : a theory or system of moral values

the discipline dealing with what is good and bad and with moral duty and obligation

23

Ethics defined – Oxford Dictionary

branch of knowledge that deals with moral principles

moral principles that govern a person’s behaviour or the conducting of an activity

24

Schools of Ethics – Western Philosophy

• virtues (such as justice, charity, and generosity) to act in ways that benefit both the person possessing them and that person’s society

Aristotle

• concept of duty central to morality: humans are bound, from a knowledge of their duty as rational beings, to respect other rational beings

Kant

• asserts that the guiding principle of conduct should be the greatest happiness or benefit of the greatest number

Utilitarianism

25

Ethics choice

rongryte

26

Why businesses bother with a code of ethics ?

rongryte

27

Why businesses bother with a code of ethics ?

3 Levels of code

Code of

Business Ethics

Business Conduct

Professional Practice

28

Business Ethical Code

Values

Stakeholders

Publicly available

How to implement

Guidance

29

Code of Business Conduct

Rules

Employees

Internal (Not Public)

Compliance

Guidance

30

Code of practice (professional ethics)

Rules

Professions

Members / Public

Compliance

Guidance

31

Code of practice (professional ethics)

"Principles, values, standards, or rules of behavior that guide the decisions, procedures and systems of an organization in a way that (a) contributes to the welfare of its key stakeholders(b) respects the rights of all constituents affected by its operations.”IFAC – International Federation of Accountants, Defining and Developing an Effective Code of Conduct for Organizations

32

Ethics and accountants

ALL – different moral philosophies:

• Our PRINCIPLED CONCIENCE – we do the right thing

because it is fair

• Our SOCIAL CONCIENCE – we decide what is right by

considering the consequences on others

• Our RULES CONCIENCE – we do not need to think

because rules tell us what is right and wrong

33

CIMA’s standards and ethics

• The concepts of ethics, social responsibility and

sustainability are not new to our business.

• Ethics and CIMA’s adopted code sit at the core of the

practice of management accountants, are embedded in our

values and are a key component of our qualification and

professional recognition

34

Professionalism and ethics

• Integrity

• Objectivity

• Professional competence and due

care

• Confidentiality

• Professional Behaviour

35

Integrity

• Straightforward• Honest

Objectivit

y

• Not to allow one’s professional or business judgement to be overridden by:• Bias• Conflict of interest• Undue influence

36

Confidentiality

• Maintain confidentiality

Professional

Behaviour

• Obligation to comply with relevant law and regulations

• Avoiding any action that discredits the profession

37

Professional

Competence and Due Care

• Maintaining professional knowledge and skills

• Ensuring sound and independent judgement

38

Professionals and ethics

www.cassknowledge.com/research/article/trust-and-values-city

Those who are members of professional institutions

tend to feel more personally engaged in handling

ethical issues, whereas those who are not members of a

professional body tend to look to their employer's

senior management for action

39

Sustainability pitfalls

“If ... You can't be a good example, then you'll just have to be

a horrible warning.”

When individuals act with out the long term view and ethical

failures come to light the result is a loss of public trust, brand

damage, impact on market value, and, often increase in

regulations

Examples:

40

Ethics Survey

Majority of organisations have codes and supporting initiatives

41

An average of 80% have a code of ethics globally – and this is reflected in different markets

Does your organisation provide a code of ethics or similar document to guide staff about ethical standards in their work?

Ethics Survey

42

Do you ever feel under pressure from your colleagues or manager to compromise your organisation’s standards of ethical business conduct?

One third of respondents may feel under pressure from colleagues or managers to compromise their organisations’ standards

Ethics Survey

43

Pressures vary across markets, perhaps reflecting challenges in external operating environment

Do you ever feel under pressure from your colleagues or manager to compromise your organisation’s standards of ethical business conduct?

Ethics Survey

444444

Key findings –Role of the management accountant Being guided by ethical

conduct is key

83% view it as a part of their role. Of these, over one in four see it as a major part

To what extent is managing your organisation’s ethical performance a part of your role now?

44

454545

Key findings

There are many ways that they contribute, primarily upholding the code of ethicsWhat ways do you contribute to management of ethical performance

45

46

Finance and fraud

• A typical fraudster is male, aged 36 to 45, holds a senior job in finance,

has worked for his company for more than a decade and acts in collusion

with a partner

• Examples: mis-statement of financial results, theft and expense abuse

• Most fraudsters work in their company's finance department (32%),

• After finance, fraudsters are most likely to work in the chief executive's or

managing director's office (26%, up from 11% in 2007) or in operations

and sales (25%)

KPMG: analysis of global patterns of fraud 2011

47

Finance and fraud

• Big jump in the number of cases involving the exploitation of weak

internal controls – up to 74% in 2011 from 49% in 2007”

• But personal greed remains the prime motivation for fraud, followed

by pressure to reach tough profit and budget targets

• There tends to be less fraud in companies that make intolerance of

fraud part of the corporate culture and which set realistic and

achievable targets for employees

48

Benefits of ethical business: Corporate return

Improved employee relations

High performance corporate culture

Understanding Stakeholders’ needs

Responding to environmental

agenda

Business sustainability

49

12% more

50

Ethical DilemmasCase study: exam results

51

Case study: withholding information 

You are a CIMA member who is a non-executive director of a large services company. The board of directors meets on a monthly basis to discuss the quarterly forecast and other business issues.

 

It is the responsibility of the finance director to distribute papers at least two weeks prior to the date of the meeting. These papers should first be signed off by the CEO. Recently documents have only been received a day before the meeting. You have raised this with the finance director who has stated the delay is due to the sign-off by the CEO. You do not feel that you are given sufficient time to review the papers, and also believe the information that is available is not complete and therefore difficult to fully appraise. The CEO is a very dominant character and many members of the board are nervous about broaching the matter..

 

52

Ethical Conflict Questions

1. What are the ethical issues facing the member?

2. Which of the fundamental principles of the Code are

relevant?

3. What are the threats to the principles?

4. Is there any further information needed?

5. What courses of action are available? What would you do

next?

53

How do we support it?

• Research/publications• Roundtable / focus group events• Help lines• Web presence & resources• Oversight of members and students

54

How do we deliver it?

• Setting standards• Approval by external regulators• Licensing / Annual monitoring - CPD• Oversight of members and students

55

How Ethical are you? - 8CEO of Barclays Bank, Antony Jenkins, told 140,000 staff worldwide they would be expected to adopt a new set of values, or leave the company. In a memo to all staff Jenkins said: ‘We must never again be in a position of rewarding people for making the bank money in a way which is unethical or inconsistent with our values. Unless we operate to the highest standards and our stakeholders trust us to behave with integrity, no business – and certainly no financial institution – can continue to be successful.’“Barclays employees have been told to adopt five key values: respect, integrity, service, excellence and stewardship. Jenkins warned: ‘There might be some who don’t feel they can fully buy in to an approach which so squarely links performance to the upholding of our values ‘My message to those people is simple: Barclays is not the place for you. The rules have changed. You won’t feel comfortable at Barclays and, to be frank, we won’t feel comfortable with you as colleagues.’

56

How Ethical are you? - 9

Let's just say it: Samsung is a copycat.

This may be disputed, subject to appeal, void where prohibited, and so on--but after last August's $1 billion judgment by a California jury, we can say without fearing a libel suit that in developing its Galaxy smartphones, Samsung stole design elements from Apple's iPhone. Sure, the "stolen goods" were for comically insignificant elements that perhaps didn't deserve patent protection to begin with: One was for icons with rounded corners while another was for the iPhone's rectangular shape. If Samsung had gone with an ovular phone and sharp-cornered icons, perhaps all this litigation could have been avoided.In a 2010 memo, Samsung mobile chief JK Shin did encourage his designers with the phrase, "Let's make something like the iPhone." So feel free, if you must, to shake your head, sigh, and chalk up the Korean conglomerate's sudden, remarkable success to the business equivalent of cheating on a grade-school spelling test. Bad, (unEthical ?) Samsung!

57

CIMA Code of Ethics

CIMA Code of Ethics video

58

CGMA

CGMA ethics animation

59

Ethics – a choice

61

Purity

62

Choose Ethics

Thank you!

www.trginternational.com