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Ethics, Integrity and Trust

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This webinar provided recommendations on how organizations can address the integrity and trust issues caused by employees who do not make decisions that align with the ethics of the organization. We discussed differing ethical perspectives, business and professional ethics codes of conduct, and methods to implement the code throughout the organization. We discussed various ethical decision making frameworks and how they can be applied in organizations.

Published in: Business
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Ethics, Integrity and Trust

  1. 1. Building Successful Employee Relationships A Cornerstone to Fraud Prevention and Risk Management
  2. 2. Building Successful Employee Relationships A Cornerstone to Fraud Prevention and Risk Management
  3. 3. Building Successful Employee Relationships A Cornerstone to Fraud Prevention and Risk Management
  4. 4. Ethics Webinar Ethics, Integrity & Trust
  5. 5. Elaine Nissley, Principal MBA, CISA, PMP, CRISC, CRMA Internal Audit & Management Consulting ENissley@macpas.com www.macpas.com
  6. 6. Webinar Objectives Understand the Connection Between Ethics, Integrity and Trust. Understand Different Ethical Perspectives Understand different Ethical Decision Making Frameworks. Learn How to Apply an Ethical Decision Making Framework
  7. 7. Ethical Perspectives COMMON GOOD JUSTICE
  8. 8. Ethical Perspective Utilitarian/Results Principle Consequences Greatest Happiness Pleasure vs Pain Cautions Individual Perspective Impact to the Masses
  9. 9. Ethical Perspective Moral Rights Principle Protects and respects moral rights Six Moral Rights Consent Privacy Freedom of Conscience Free Speech Due Process Life and Safety
  10. 10. Ethical Perspective Fairness/Justice Principle  Fair distribution of benefits and burdens, consistency People with similar characteristics are treated the same Procedural Clear rules Consistently applied Compensatory Compensated for cost of injuries by responsible party Party not responsible if they had no control over circumstances
  11. 11. Ethical Perspective Common Good Principle Good of the whole Part of a larger community Corporate initiatives Social Responsibility Community Service
  12. 12. Ethical Perspective Virtue Principle Moral character traits Honesty, courage, faithfulness, trustworthiness, integrity Individual Human virtues What sort of person one should be
  13. 13. Ethical Framework UTILITARIAN RIGHTS FAIRNESS COMMON GOOD VIRTUE “Ethics consists of knowing what we ought to do, and such knowledge can be taught.” Socrates
  14. 14. Integrity & Trust "The most important persuasion tool you have in your entire arsenal is integrity." - Zig Ziglar "Have the courage to say no. Have the courage to face the truth. Do the right thing because it is right. These are the magic keys to living your life with integrity." - W. Clement Stone “Trust is the glue of life. It's the most essential ingredient in effective communication. It's the foundational principle that holds all relationships.” - Stephen Covey
  15. 15. Ethical Decision Making Frameworks RESOLVEDD Model  Jonathan Kvanig Davis 7 Step Process  Michael Davis Markkula Framework  Markkula Center for Applied Ethics PLUS Model  Ethics & Compliance Initiative
  16. 16. RESOLVEDD R review the facts E estimate the problem S list possible solutions O state probable outcomes or consequences of each solution L describe the likely impact of the solution V explain the values upheld or infringed upon E evaluate solutions in terms of outcomes, likely impact and values D decide on the best solution D defend the decision against objection Raymond Pfeiffer and Ralph Forsberg, editors, Ethics on the Job: Cases and Strategies (Third Edition, Wadsworth, 2004).
  17. 17. Davis 7-Step Process 1. State problem 2. Check facts 3. State specifications 4. Develop list of five options 6. Make a tentative choice 7. Make final choice A. Harm test B. Publicity test C. Defensibility test D. Reversibility test E. Virtue test F. Professional test G. Colleague test H. Organization test Michael Davis, “Developing and Using Cases to Teach Practical Ethics”, Teaching Philosophy, Volume 20, December 1997, pp. 353-385 5 TEST OPTIONS
  18. 18. Markkula Framework 1. Recognize an Ethical Issue 2. Get the Facts 3. Evaluate Alternatives 4. Make a tentative choice 5. Make final choice Markkula Center for Applied Ethics at Santa Clara University. Ethical Perspective
  19. 19. Plus P = Policies L = Legal U = Universal S = Self Connects.ethics.org Define Problem Define Possible Solutions Evaluate Alternatives Implement the Solution Evaluate Outcomes
  20. 20. Apply Ethical Decision Making Process Code of Ethics/Conduct Organizational Professional ETHICAL DECISION APPLY MODEL CODE
  21. 21. Institute of Internal Auditors Professional Code of Ethics FRAMEWORK INTEGRITY OBJECTIVITY CONFIDENTIALITY COMPENTENCY ethicsE
  22. 22. Summary Integrity – consistency that establishes trust and provides the basis for reliance on the auditor’s judgement. Objectivity – Balanced assessment of all relevant circumstances, not influenced by the auditor’s own interest or by the judgement of others. Confidentiality – Respect for the value and ownership of information the auditor receives. The auditor does not disclose information without appropriate authority unless there is a legal or professional obligation. Competency – Auditors have the knowledge skills and experience needed to perform the services.
  23. 23. Internal Auditor Ethical Dilemma Problem – You have just completed a governance audit of senior management and the Board of Directors. There were several significant findings. The President of the company asks you to change the report and change or suppress many of the findings. It is quite clear that failure to comply will result in the loss of your job. Alternatives 1. Comply with the President’s request. 2. Compromise and reduce some of the findings but do not remove any of the findings. 3. Report the incident through the organization’s hotline and do not issue the report. 4. Issue the report with all of the findings intact and report the incident.
  24. 24. Evaluation of the Solutions Alternative Solutions 1. Alter report as requested 2. Sugar coat the report 3. Whistleblow and do not issue the report 4. Whistleblow and issue the report IIA Code of Ethics Integrity Objectivity Confidentiality Competency
  25. 25. Internal Auditor Ethical Dilemma Implement the Decision Issue the audit report Report the President’s action on the Whistleblower Hotline. Evaluate the Outcomes The President terminates you. You can still sleep at night Human Resources investigates the whistleblower report You are reinstated with back pay.
  26. 26. Hershey’s, Code of Ethical Business Conduct, Hershey, Pa. retrieved from www.thehersheycompany.com
  27. 27. Hershey’s Code of Ethical Business Conduct OUR COMMITMENT TO STOCKHOLDERS We act honestly and transparently at all times, maintaining the trust our stockholders have placed in us. OUR COMMITMENT TO CONSUMERS We maintain the trust consumers place in our brands, providing the best products on the market and adhering to honest marketing practices. OUR COMMITMENT TO THE GLOBAL COMMUNITY We comply with all global trade laws, protecting our natural resources and supporting the communities where we live, work and do business. OUR COMMITMENT TO THE MARKETPLACE We deal fairly with our business partners, competitors and suppliers, acting ethically and upholding the law in everything we do. Hershey’s, Code of Ethical Business Conduct, Hershey, Pa. retrieved from www.thehersheycompany.com
  28. 28. Ethical Dilemma Problem – You have just received a tip on the hotline that factories in China are requiring children to work ten hour days in poor environmental conditions such as no ventilation and poor temperature controls. Alternatives 1. Ignore the report because the organization’s most recent inspections of the factories in China did not report these types of conditions. 2. Ignore since this is the only incident that has been reported. 3. Conduct a special investigation into the specific allegations. 4. Review the organization’s process for inspection of factories and use the information from the tip to improve the process as needed to address this concern.
  29. 29. Evaluation of the Solutions Alternative Solutions 1. Rely on Company Inspections 2. Ignore and wait for additional similar reports 3. Special Investigation 4. Assess and upgrade current inspection process Hershey Code of Ethical Business Conduct Maintain Stockholder Trust Maintain Consumer Trust Comply with Global Trade Laws and Support Communities Deal Fairly with Business Partners, Competitors, and Suppliers
  30. 30. Ethical Dilemma Implement the Decision Assess and upgrade current inspection processes. Take action based upon the results of the assessment. Evaluate the Outcomes The company may need to conduct an inspection sooner than planned You have eliminated the risks of bad press and resulting reduced market share.
  31. 31. Implementation of the Code Written Acknowledged Training Embedded in the culture Evaluation Socrates concluded that, “Ethics consists of knowing what we ought to do, and such knowledge can be taught. “
  32. 32. DO YOU KNOW WHAT YOU DO NOT KNOW? ETHICAL BUSINESS EVALUATION Internal External
  33. 33. THANK YOU! Elaine Nissley, Principal MBA, CISA, PMP, CRISC, CRMA Internal Audit & Management Consulting ENissley@macpas.com www.macpas.com
  34. 34. Questions? Elaine Nissley, Principal MBA, CISA, PMP, CRISC, CRMA Internal Audit & Management Consulting ENissley@macpas.com www.macpas.com

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