IPC ethics


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IPC ethics

  2. 2. IPCC PRINCIPLES OF BUSINESS ETHICS 1.ETHICS - Greek word “Ethos” Ethos are value concepts Which guide us to say What is Right and Wrong What is good and bad What is proper and improper 2. Ethics are applicable to all sections of the society. 3. Business too has ethics 2
  3. 3. IPCC PRINCIPLES OF BUSINESS ETHICS What do you mean by the term 'Ethics' ? The term 'ethics' is derived from the Greek word 'ethos' which means character. Ethics are the principles of conduct governing an individual or a group. It is concerned with norms for conduct of people as members of society as it relates to what is good or bad, and having to do with moral duties and obligations. Definition : defined ethics as “the application of moral values or codes to complex problems using a rational decision making process”. The outcome of this process is usually a behaviour or set of behaviors. 3
  4. 4. IPCC PRINCIPLES OF BUSINESS ETHICS What is 'Business Ethics' ? Definition : “Business Ethics is the study of what constitutes right and wrong or good and bad human conduct in business context”. Thus, business ethics deals with morality in business environment. It involves moral judgement based on understanding of the society. It extends beyond the legal questions and involves goodness and badness of an act. 4
  5. 5. IPCC PRINCIPLES OF BUSINESS ETHICS 1. Business ethics refers to the application of everyday moral or ethical norms to business. It requires an awareness of how the products and services of an organisation and the actions of its employees, can affect its stakeholders and society as a whole, either positively or negatively. 2. Ethics in business organisation relates to a culture, values, leadership, programs and enforcement. corporate 3. It is that set of principles or reasons which governs the conduct of business - at the individual or collective level by the application of ethical reasoning to specific business situations and activities. 4. Business Ethics deal with the morality for conducting business activities. 5. It is the behaviour of businessmen in business situations. 5
  6. 6. IPCC PRINCIPLES OF BUSINESS ETHICS What is the difference between ethics and morals ? Basis of difference Ethics Morals Meaning Ethics relates to what is good or bad, moral duties and obligation. Moral relates to principles of right and wrong. Origin Greek word “Ethos” means character. Latin word “MO” means customs. Group/ Personal Character attribute. Custom is an attribute of a group or society. 6 is a personal
  7. 7. IPCC Scope Expression PRINCIPLES OF BUSINESS ETHICS Ethics is much wider in scope. It examines the moral standards of a Morals have smaller scope than group or society to determine ethics. It addresses, human needs whether these standards are for belonging and emulation. reasonable or unreasonable in situations. Moral norms are usually Ethical norms are comparatively expressed as general rules and abstract. It cannot be described in statements, e.g. " always tell the general rules and statements. truth" Ethics are adopted or absorbed by an individual gradually by taking Absorption reasonable decisions in appropriate situations. 7 Morals are typically adopted or Absorbed since childhood from family, friends, school, religious, leaders and so on.
  8. 8. IPCC PRINCIPLES OF BUSINESS ETHICS In what way Ethical Practices relate to functional area of Business ? Functional Area of Business 1.Plant location 2.Production 3.Purchase 4.storage 5.Marketing 6.Advertising 7.Administration 8.Finance 10.Personnel 8 Ethical Practice. No adverse impact on local community Control of Pollution No hoarding of raw material No hoarding of finished goods Fair treatment to customers Truthful and realistic claims Concern for social values Protection and appreciation of Capital Just and equitable treatment to employees.
  9. 9. IPCC PRINCIPLES OF BUSINESS ETHICS Explain the social sins listed by Mahatma Gandhi. (Nov. 10) 1. Politics without Principles 2. Wealth without work 3. Commerce without morality 4. Knowledge without character 5. Pleasure without Conscience 6. Science without humanity 7. Worship without sacrifice 9 Non-Violence, Justice & Harmony among people of all faiths
  10. 10. IPCC PRINCIPLES OF BUSINESS ETHICS What are the benefits of Business ethics ? The advantages or benefits of Business Ethics are as follows :1. Improvement of society : Focus on Business Ethics has substantially improved society. 2. Ethical Practices: Exploitation of workers and children, monopolistic price fixing and profiteering, harassment of employees at workplace etc. cannot be practiced by business enterprises now. 3. Maintaining moral course in turbulent times: Business Ethics is helpful during times of fundamental change, when there is often no clear moral compass to guide leaders through complex conflicts about what is right or wrong. 10
  11. 11. IPCC PRINCIPLES OF BUSINESS ETHICS 4. Strong teamwork and productivity : Employees feel strong alignment between their values and those of the organization, as well as motivation and performance of employees are also improved. 5. Employee growth : Focus on ethics in the workplace helps employees face reality, both good and bad, in the organization. 6. Ensure that policies are legal : Attention to ethics ensures highly ethical policies and procedures in the workplace. For example, in matters of hiring, evaluating, disciplining, firing, etc. 11
  12. 12. IPCC PRINCIPLES OF BUSINESS ETHICS 7. Compliance with law : Ethical programs helps to avoid criminal acts" of omission" and reduce fines, 8. Total Quality Management (TQM) : Ethical programs helps in identifying preferred values and ensuring that organizational behaviours are aligned with those values for TQM purposes. 9. Diversity Management : Ethics management programs are useful in managing diversity. 10. Strengthens the organization : i. Managing ethical values legitimizes managerial actions ii. Strengthens balance of the organization's culture iii. Improves trust in relationship between individuals and groups iv. Supports greater consistency in standards. 12
  13. 13. IPCC PRINCIPLES OF BUSINESS ETHICS State the ancestry of ethical standards. (RTP - May 12) 1. The Utilitarian Approach - (Increase Good done & Reduce Harm done) 2. The Rights Approach - (Choose freely your life and decide what you want to do with your life) 3. The Fairness/ Justice Approach - (Equals to be treated equally.) 4. Common Good Approach - (Respect & Compassion for common good.) 5. Virtue Approach - (Our habits that enable us to take ethical actions. Truth/ Compassion/ Love/ Self Control/ Integrity/ Honesty etc.) 13
  14. 14. IPCC PRINCIPLES OF BUSINESS ETHICS What is meant by the term 'Stakeholders'? Management is not accountable solely to Investors (shareholders) but also to other interest groups or constituents who are affected by corporate activity. The term "Stakeholders" describes such constituents of an organisation - the individuals, groups or other organization which are affected by, or can affect the organization in pursuit of its goals. Stakeholders of a company constitutes:1. Employees 2. Trade Unions 3. Suppliers 4. Government 5. Competitors 6. Customers 7. Shareholders and investors 8. Local Communities. 14
  15. 15. IPCC PRINCIPLES OF BUSINESS ETHICS Write a note on Stakeholders. (Constituents of an organisations - The individuals, groups or other organisations which are affected by, or can affect the organisation in achieving its goals. ) Stakeholders Internal Stakeholders Shareholders Employees Management Trade Union 15 External Stakeholders Consumers Suppliers Creditors Competitors Local Community Government
  16. 16. IPCC PRINCIPLES OF BUSINESS ETHICS PRINCIPLES OF BUSINESS ETHICS ETHICAL DILEMMA Business issues are straight forward and hence easy to resolve. But ethical issues bring a number of alternatives to choose from. So, one is confused – This is called ethical dilemma. We are not caught in a conflict between right and wrong, but 16 between right and right.
  17. 17. IPCC PRINCIPLES OF BUSINESS ETHICS How to handle ethical dilemmas ? 1. Analyse all the alternatives 2. Make choice between personal values and goals organizational values and success 3. Define the problem clearly 4. Stand on the other side and see the problem 5. How did the situation arise ? 17
  18. 18. IPCC PRINCIPLES OF BUSINESS ETHICS 6. What is the intention of the solutions ? 7. Can your decision injure anyone ? 8. Can you discuss the problem with the affected persons ? 9. Can you be confident that your position will be valid for a long period, as it seems now ? 10. Can you disclose your decision to your boss, CEO, Family members, Board Of Directors and Society ? 18
  19. 19. IPCC Corporate Governance and Corporate Social responsibilities (CG & CSR) Introduction  Managers / Owners have realized that profits should be 19 made by conducting business honestly, legally and morally.
  20. 20. IPCC Corporate Governance and Corporate Social responsibilities (CG & CSR) Definition “Corporate Governance is about promoting corporate fairness, transparency and accountability.” CORPORATE GOVERNANCE 20 Definition Formal system of Accountability and control for Ethical and socially responsible organizational decisions and use of resources. Scope 1.Accountability to stakeholders / employees / unions / govt. /sh.holder / suppliers / competitor /community 2.Power to the management 3.Control over the above powers.
  21. 21. IPCC Corporate Governance and Corporate Social responsibilities (CG & CSR) What is the characteristics of good Corporate Governance? Good Corporate Governance is a formal system of accountability, decision-making and control of ethical and socially responsible organisational decisions and use of resources. Good corporate governance has some major characteristics. They are as follows : 1. 2. 3. 4. 5. 6. 7. 8. 21 Participatory Consensus oriented Accountable Transparent Responsive Equitable & inclusive Efficient and effective, and Follows the rule of law.
  22. 22. IPCC Corporate Governance and Corporate Social responsibilities (CG & CSR) Role played by different committees in regulating Corporate Governance. 1. Board of Directors 2. Audit Committee 3. Compensation Committee 4. Nomination Committee 5. Investor Services Committee 6. Corporate Management Committee 7. Divisional Management Committee 22
  23. 23. IPCC Corporate Governance and Corporate Social responsibilities (CG & CSR) CSR CORPORATE – SOCIAL RESPONSIBILITY 23
  24. 24. IPCC Corporate Governance and Corporate Social responsibilities (CG & CSR) Introduction Business is a part of the society. Business needs support of society. Healthy business cannot exist in a sick society. 1. Definition of H.R. Bowen 2. Business must take care of the quality of life of society. 3. Protect environment and human rights. 24
  25. 25. IPCC Corporate Governance and Corporate Social responsibilities (CG & CSR) What is corporate social responsibility? (RTP May 11) Definition of H.R. Bowen 1. “The obligation of business to pursue those policies, to make those decisions or to follow those lines of actions which are desirable in terms of the objectives and values of our society” 2. “CSR is achieving commercial successes in ways that honor ethical values and respect people, communities, and the natural environment” 25
  26. 26. IPCC Corporate Governance and Corporate Social responsibilities (CG & CSR) Need for CSR 1. Iron Law of Responsibility Society gives charter to business This charter can be revoked or amended if business fails to respond. 2. Business can use its skills to develop society. 3. Wealth creation for society. 4. Effective use of resources and power 5. Long term benefits. 6. Better public image. 7. Avoid government intervention 8. Minimize environmental damage 26 9. Avoid misuse of power.
  27. 27. IPCC Corporate Governance and Corporate Social responsibilities (CG & CSR) Benefits for CSR 1. Improve financial performance 2. Reduce operating cost Recycling, waste water use, flexi time 3. Increased sales (use of environment friendly, equipments, No child labour etc. 4. Brand image 5. Productivity and quality(better working conditions reduced defective role. 6. Attract and retain employees 7. Reduce govt. intervention 8. Access to capital market 27 9. Preference for awarding govt. contracts (UID – Infosys)
  29. 29. IPCC Corporate Governance and Corporate Social responsibilities (CG & CSR) Some of the strategies that companies use for implementing CSR policies are 1. Mission / Vision statements E.g. Tata steel, ITC, etc. 2. Cultural values 3. Management structure (A shown above) 4. CSR Planning to identify area 5. Employee recognition 6. Communication 7. Education & training 8. CSR Reporting (in Annual Report) 9. Use of influence (Some model companies can influence 29 others in the locally)
  31. 31. IPCC WORK PLACE ETHICS Work Place Ethics “How one applies values to work that is a set of Right and wrong actions at the work place” It covers issues relating to : Or List the commonly recognized Employment Discrimination practices. (May 11) 1. Recruitment and selection 2. Promotion 3. Conditions of Employment 4. Wage payment 5. Transfer etc. of the Human Resources of an organisation. 6. 31 Dismissals
  32. 32. IPCC WORK PLACE ETHICS What points/ factors are to be considered for creative a sound ethical environment in a company? (RTP - Nov. 10) 1. Ensuring that employees are aware of their legal and ethical responsibilities. (Trade and motivate employees in ethics programme. Eg. Wipro ltd.) 2. Providing a communication system between the management and the employees. (Report about fraud without any fear of being reprimanded) 3. Ensuring fair treatment to those who act as whistle blowers. (RTP May 11) (Appreciate whistle blowers. Enron Ltd.) 32
  33. 33. IPCC WORK PLACE ETHICS Importance of Work Place Ethics : 1. No man or woman should be exploited in his / her work, or alienated through his / her work. 2. Therefore, employer / organization must take steps to create a work. Environment where employers have a clear understanding of what is right and wrong. 3. Employers should feel free to discuss ethical issues. 4. Employees should feel to report violation of ethical standards. 33
  34. 34. IPCC WORK PLACE ETHICS Else, What Happens? 1. Employees perform unethical activities. 2. Report violations to outsiders. 3. Lack of trust in infernal forum. 4. Inability to retain good people. 5. Loss of competitive advantage in the market. 6. Loss of Reputation. 7. More legal battles in the court of law 34
  35. 35. IPCC WORK PLACE ETHICS Bring out some examples of ethical issues faced by the individual in the workplace. (RTP Nov. 10, ICAI Nov. 10) Vis-à-vis Suppliers and Business Partners Bribery and immoral entertainment Vis-à-vis Vis-à-vis Customers Employees Unfair pricing Discrimination Cheating Customers between suppliers Dishonesty in making and keeping contracts Deceitful Advertising Research 35 Confidentially Discrimination in hiring and treatment of employees Harassment in workplace Vis-à-vis resource Management Misuse of company funds Tax evasion vis-à-vis resource Management
  36. 36. IPCC WORK PLACE ETHICS Factors Influencing Ethical Behaviour Individual 1. The Individual employees beliefs & values will decide his behaviour. 2. Every employee is everyday has choices before his role. 3. Sometimes values are compromised in the process of making quick decisions to achieve targets 4. E.g. gift from supplier report or fudging of A/c? 36 5. Need for self Actualisation Colleagues Corporate Culture 1. Boss 1. Company’s Policies and codes. 2. Press 2. Companies culture Provides directors 3. Subordinates set examples for ethical conduct 3. E.g. The best employee finds his boss using Company telephone for personal calls.
  37. 37. IPCC WORK PLACE ETHICS FORMS OF DISCRIMINATION 1. Sexual Discrimination 2. Sexual Harassment 3. Religions Discrimination 37
  38. 38. IPCC WORK PLACE ETHICS FORMS OF DISCRIMINATION 4. Age Discrimination 5. Nationality Discrimination 6. Handicapped Discrimination 38
  39. 39. IPCC WORK PLACE ETHICS HARASSMENT “Intimidating & Tormenting an Individual through constant interference” SEXUAL HARASSMENT 1. Improper sexual conduct at work place 2. Includes : Lewd Comments Touching Comments Persistent Attention Requests for sexual favors 39
  40. 40. IPCC WORK PLACE ETHICS 3. Man – Woman / Boss – Subordinate 4. Deprives Women of opportunities 5. Hurts sensitively and honor of women 6. Degradation of moral values 7. Legal costs to the firm 8. Productivity declines 40
  41. 41. IPCC WORK PLACE ETHICS HOW TO PREVENT SEXUAL HARASSMENT OF WOMEN? 1. Prepare Sexual Harassment policy 2. Declare strict actions 3. Educate and warn all employees 4. Adopt procedure to handle 5. Assurance of Confidentiality - of the victim 6. Assurance of non – retaliation 7. Take disciplinary action 41 8. Pay compensation to victim
  42. 42. IPCC WORK PLACE ETHICS GUIDELINES FOR MANAGING ETHICS AT WORK PLACE 1. Prepare code of conduct 2. Ombudsman 3. Leadership Example 4. Open Communication 5. Ethical Culture 6. Group Decision Making 7. Cross Functional Teams 8. Anonymous Suggestion 9. Grievance Procedure 42 10. Review & Revision
  44. 44. IPCC ENVIRONMENT & ETHICS 1. Environmental Ethics deal with the “Rights & wrongs” with regard to the conduct of business vis-à-vis its impact of environment. 2. Industrial & Technological brought material prosperity. 3. They have also environment. 44 equally developments brought threats have the
  45. 45. IPCC ENVIRONMENT & ETHICS Explain the concept of Sustainable Development. (RTP - Nov. 10) OR There is no economic growth without ecological costs. Explain. (RTP - May 11, May 12) 1. High economic growth means higher rate of extraction and utilisation of resources. 2. Sustainable development is to meet the needs of future generations. 3. Therefore, satisfy present requirements without affecting future generations 4. Economic growth should be environmentally sustainable 5. Efforts are to be made for resource regeneration. 45
  46. 46. IPCC ENVIRONMENT & ETHICS Sustainable Development (SD) 1. Simple meaning of SD – maintaining development for a period over time 2. But a widely cited definition is Development that meets the needs of the present without compromising the needs of the future generations. 3. Economic growth has to be environmentally sustainable. 4. Hence need for resource regeneration. 5. Adopt positive approach to environment 46
  47. 47. IPCC ENVIRONMENT & ETHICS Pollution & Resource depletion 1. 2. Global Warming 3. Ozone depletion 4. Acid rain 5. Water pollution 6. Land pollution 7. 47 Air pollution Nuclear pollution 8. Soil pollution
  48. 48. IPCC ENVIRONMENT & ETHICS GREETING AND GREEN INITIATIVE When any company adopts anti pollution environment policy, it is said to be “going green” Why go green ? Economic Benefits Reduced wastage So reduced handling expenses Avoid fines Competitive Advantage 1.Efficient products 2.Better / cleaner technology 3.Waste reduction Public image Better image Employees feel proud Investors are happy Consumers are delighted Examples [Recycling – Carbon reduction – CFC free – CFC Bulbs – Save Power – BEE star works for electrical units – paper glass – paper less offices – ITC Hotels recycling of used water – 5/7 Star 48
  49. 49. IPCC ENVIRONMENT & ETHICS GREEN ACCOUNTING 1. Conventional accounting leads to policy decision which are now sustainable for the country. 2. Green Accounting focuses on such deficiencies. 3. The environmental costs must be properly reflected in the goods and services. 4. Costs will increase, but consumer is willing to adjust according to the market environment. 5. This helps to reduce damage to environment. 6. The prices charged will influence consumer behaviour to avoid exploitation of resources. 7. Over utilization of resources will come down. 8. 49 9. Adopt rule “Polluter Pay Principle” – “PPP” Remove subsidies adopt rule “PPP” process for
  50. 50. IPCC ENVIRONMENT & ETHICS “Polluter Pay Principle” 50
  52. 52. IPCC Q. ETHICS IN MARKETING & CONSUMER PROTECTION Explain the relationship between ethics and marketing OR Short Note on Ethical dilemma in marketing P 1. Marketing objectives P 4 PS 2. Ethics Right or wrong Good or bad 3. Dilemma a. Class of objectives b. One cannot be at the cost of another c. Need to balance 52 P P
  53. 53. IPCC ETHICS IN MARKETING & CONSUMER PROTECTION NEED FOR ETHICAL BEHAVIOUR IN MARKETING OR WHY ETHICS ARE NEEDED IN MARKETING ? 1. To restore / reverse declining public confidence in marketing 2. To reduce govt. control on marketing 3. To regain the power granted by the society (Ratan Tata / Anand Mahindra / A.M. Naik / Mukesh Ambani / Kumar Birla / R.K. Bajaj / etc. have great deal of social power and speak out on economic issues) 4. To protect image of the organization. 5. To uphold the well-being of the consumer and society. 53
  54. 54. IPCC ETHICS IN MARKETING & CONSUMER PROTECTION COMPETITION ACT, 2002 1. Earlier MRTP Act, 1969 2. Competition Act, 2002 3. Similar laws in all countries. 4. Whole of India except Jammu and Kashmir. 5. Objectives a.To establish C.C.I. (Completion Commission of India) b. To prevent adverse impact of competition c. To promote healthy competition d. To protect consumer e. To ensure freedom of trade 6. Prohibit anticompetitive agreements like Tie-up sales, cartels, Resale price, manmade 54 Regulate – mergers, takeovers, etc. 7.
  55. 55. IPCC ETHICS IN MARKETING & CONSUMER PROTECTION What are the Parameters/ Provisions of Competition law/ Competition Act 2002? (RTP - May 11, ICAI - Nov. 11) 1. Prohibition of certain agreements. 2. Abuse of dominant position. 3. Regulation of combinations. 55
  56. 56. IPCC ETHICS IN MARKETING & CONSUMER PROTECTION Explain the eight consumer Rights and Themes. (RTP - May. 12) OR State the objectives of the Consumer Protection Council in India. (Nov. 10) 1. Right to basic needs 2. Right to safety 3. Right to choose 4. Right to redress 5. Right to information 6. Right to consumer education 7. Right to representation 8. Right to healthy environment 56
  57. 57. IPCC ETHICS IN MARKETING & CONSUMER PROTECTION Explain the consumer protection councils in India. 1. The Central Consumer Protection Councils. 2. The State Consumer Protection Councils. 3. The District Consumer Protection Councils. 57 (RTP - Nov. 11)
  58. 58. IPCC ETHICS IN MARKETING & CONSUMER PROTECTION Particulars Consumer Interest Public Interest 1. Meaning 2. Interested Class Society refers to the collection of Consumer is a member of a broad sub-systems, e.g. consumers, class of people who purchase, manufacturers, distributors, use, maintain and dispose of input suppliers, service products and services. providers, etc. 3. Scope 58 Area which benefit the Area in which the society as a “Consumer” as a whole, whole has some interest is called constitute Consumer Interest. Public Interest. Consumer is only a sub-system of a larger system i.e. general public Public Interest is wider in scope / society. Hence, consumer than consumer interest. interest is restricted in scope. Contd…
  59. 59. IPCC ETHICS IN MARKETING & CONSUMER PROTECTION Particulars Consumer Interest Public Interest 4. Factors 5. focus If Consumer welfare is at the centre Government policy decisions of any Governmental policy, such which are intended to benefit the measures / decisions are said to be society as a whole, constitute taken in “Consumer Interest”. Public interest. 6. Examples 59 Consumers are affected by pricing Public interest reflects the morals policies, financing, practices, quality during period and the established of goods and services and various interest of the society. trade practices. Maintaining law and order, Formulation of Competition Act, providing for the defence of the Regulation of Consumer Protection country, maintenance of Councils, Consumer Courts / monuments of national Adalats, etc. importance, etc.
  61. 61. IPCC ETHICS IN ACCOUNTING & FINANCE What are the general reasons for unethical behaviour in context of Accounts & Finance? 1. Money-Mindedness. 2. Accounting Complexities. 3. Short-Term Profitability. 4. Ignoring small unethical issues. 5. Economic Cycles. 61
  62. 62. IPCC ETHICS IN ACCOUNTING & FINANCE Explain “Ethical Dilemma” in the context of a Finance and Accounting Professional. (RTP - Nov. 11) 1. Ethical Dilemma a. Value-conflicts b. Multiple alternatives c. Consequences to stakeholders 2. Examples: C.A. Profit Forecast for a new project a. Unrealistic projection of revenue b. Projecting realistic but insufficient revenue. (Both have their own risks) 62
  63. 63. IPCC ETHICS IN ACCOUNTING & FINANCE What are the Fundamental Principles related to ethics. (Nov. 10, May 11, RTP - Nov. 11) 1. Principles of Integrity: (Honesty and straightforwardness) 2. Principles of objectivity: (No Bias) 3. Principles of Confidentiality: 4. Principles of Professional Competence 5. Principles of Professional Behaviour: (Code of Conduct of ICAI) 63
  64. 64. IPCC ETHICS IN ACCOUNTING & FINANCE What are the various threats which can be faced by the Finance and Accounting Professional while working as an Auditor, Consultant or an Employee in an organization. (RTP - May 12.) 1. Self-Interest Threats 2. Self Review Threats 3. Advocacy Threats 4. Familiarity Threats 5. Intimidation Threats 64
  65. 65. The End 65