Business Ethics
AGA/Richmond Chapter
14 February 2007
Ruth W. Epps, Ph.D., CPA
Virginia Commonwealth University
I am ethical because…
I am…
• Loyal
• Truthful
• Respectful
• Honest
• Dependable
• Have integrity
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Government Scandals Make
Headlines
Halliburton's Corruption
Fannie Mae Accounting Scandal
The Real Costs of War
These events have heightened everyone's
awareness of ethical business practices.
Why Business Ethics?
• AICPA Professional Code of Conduct
• IIA Code of Ethics: Rules of Conduct
(Professional)
• Core Values (Self)
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Ethics and Business Conduct Codes
• Code should include:
– Definition of and procedures for handling,
conflicts of interest;
– Prohibition against use of corporate
information, property or opportunity for
personal gain;
– Confidential information;
– Compliance with laws;
– Reporting of illegal or unethical behavior
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The State Employee Fraud, Waste, and
Abuse Hotline
1-800-723-1615
NO - YOUR NUMBER DOES NOT SHOW UP ON A CALLER ID!!
Comptroller's Memorandum to Heads of State Agencies
and Institutions of Higher Education
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Types of Fraud To Report
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Illegal or Fraudulent Conduct
Waste of Funds
Abuse of State Property or Resources
Gross Mismanagement
Gross Neglect of Duty
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IIA Code of Ethics
Principles
Integrity
Objectivity
Confidentiality
Competency
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IIA Code of Ethics—
Rules of Conduct
1. Integrity; Internal auditors:
• Performance of work
• Observance of the law
• Shall not knowingly be a party to any
illegal activity,
• Shall respect and contribute to the
legitimate and ethical objectives of
the organization.
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2. Objectivity; Internal Auditors:
• .1 Conflict with the interests
• .2 Accept anything that may impair or be
presumed to impair their professional
judgment.
• .3 Shall disclose all material facts
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3. Confidentiality; Internal
auditors:
1.Shall be prudent in the use and
protection of information
2. Shall not use information for any
personal gain or in any manner that
would be contrary to the law.
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4 Competency; Internal auditors
1. Shall engage only in those services for which
they have the necessary knowledge, skills,
and experience.
2. Shall continually improve their proficiency
and the effectiveness and quality of their
services.
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A key point to remember about
business ethics
• State Agencies do not make ethical
decisions
• True or False????????
• True
• Individuals make the ethical choices!
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Question:
When it comes to business ethics,
which activities, functions,
decisions and/or behaviors are
really important?
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Answer:
All of them!
BEWARE,
Everything you do defines if you are
ethical.
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When is it okay to be unethical?
• NEVER!
• What are the parts of your job - and
your human interactions - to which
fairness, honesty, respect, and "doing
right" don't apply?
• THERE ARE NONE!
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Ethics Assessment
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Six basic guidelines for ethical
business operations
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Laws
Rules & Procedures
Values
Conscience
Promises
Heroes
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Laws
• Is the action you are considering legal?
• Do you know the laws governing the activity?
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RULES & PROCEDURES
• How does your planned action
compare to what is stated in the
company's policies and
procedures?
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VALUES
• Values in operation - ask yourself:
"Does the action I'm considering
follow not only the letter of the law,
but also the 'spirit' of the law?
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CONSCIENCE
• Will your actions make you feel
guilty?
• Can you truly justify your actions to
yourself?
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PROMISES
• Will your action live up to the commitment
that you made to the other person (customer,
client, supplier, employee, employer) in the
business relationship?
• Will your action build more trust?
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HEROES
• Is your action what your hero would
do in the same situation?
• How would your hero act?
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These six guidelines will help
you take action that is ethical
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Laws
Rules & Procedures
Values
Conscience
Promises
Heroes
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"3R's"
to point you and
your employees in the right
ethical direction.
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The first "R" of business ethics
is RESPECT
• Treating everyone (customers, co-workers,
vendors, etc.) with dignity and courtesy
• Using state supplies, equipment, time, and
money appropriately, efficiently, and for
business use only
• Protecting and improving your work
environment, and abiding by laws, rules and
regulations
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The second "R" of business
ethics is RESPONSIBILITY
• Providing timely, high-quality goods and
services.
• Working collaboratively and carrying your
share of the load.
• Meeting all performance expectations and
adding value.
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The third "R" of business ethics
is RESULTS
• You are expected to get results legally and
morally, by being ethical.
• Do the “ends” justify the “means”?
• If you lose sight of the distinction, you
jeopardize your job and your career.
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Take a stand!
How To Say 'NO' With Tact
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First
• Don't accuse the other person of being
unethical.
• Instead, use "I" statements to describe
your feelings
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State Your Objection And Concern
Without Indictment.
• I have serious concerns about that, and
I need your understanding ...
• I honestly believe it is wrong because ...
• I can't do what I feel is wrong ...
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Propose An Alternative Action That
You Feel Is Ethical
I think I know what you want to
accomplish, and I feel there's a
better way to do it.
How about ...
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Handling Ethical Situations
• Arrogant Employees/ Colleagues
Your colleague ignores procedures and precedents
and tries to gain power on his/her own or
through a clique.
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Common rationalizations for not
doing what's right:
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"Everyone else does it."
"They'll never miss it."
“Nobody will care."
“The boss does it."
“No one will know."
"I don't have time to do it right."
"That's close enough or good enough."
"Some rules were meant to be broken."
"It's not my job."
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Ethics Motto
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