ethics, integrity and trust

Building SuccessfulEmployee

RelationshipsA Cornerstone to Fraud Prevention

and Risk Management

Ethics WebinarEthics, Integrity & Trust

Elaine Nissley, PrincipalMBA, CISA, PMP, CRISC, CRMA

Internal Audit & Management [email protected]

www.macpas.com

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

Ethical Perspectives

COMMONGOOD

JUSTICE

Ethical PerspectiveUtilitarian/Results

PrincipleConsequencesGreatest HappinessPleasure vs Pain

CautionsIndividual PerspectiveImpact to the Masses

Ethical PerspectiveMoral Rights

PrincipleProtects and respects moral rights

Six Moral RightsConsentPrivacyFreedom of ConscienceFree SpeechDue ProcessLife and Safety

Ethical PerspectiveFairness/Justice

Principle Fair distribution of benefits and burdens, consistencyPeople with similar characteristics are treated the same

ProceduralClear rulesConsistently applied

CompensatoryCompensated for cost of injuries by responsible partyParty not responsible if they had no control over circumstances

Ethical PerspectiveCommon Good

Principle

Good of the whole

Part of a larger community

Corporate initiatives

Social Responsibility

Community Service

Ethical PerspectiveVirtue

Principle

Moral character traits

Honesty, courage, faithfulness, trustworthiness, integrity

Individual

Human virtues

What sort of person one should be

Ethical Framework

UTILITARIAN

RIGHTS

FAIRNESS

COMMON GOOD

VIRTUE

“Ethics consists of

knowing what we

ought to do, and

such knowledge can

be taught.” Socrates

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

Ethical Decision Making FrameworksRESOLVEDD Model

Jonathan Kvanig

Davis 7 Step Process Michael Davis

Markkula Framework Markkula Center for Applied Ethics

PLUS Model Ethics & Compliance Initiative

RESOLVEDDR review the factsE estimate the problemS list possible solutionsO state probable outcomes or consequences of each solutionL describe the likely impact of the solution V explain the values upheld or infringed uponE evaluate solutions in terms of outcomes, likely impact and valuesD decide on the best solutionD defend the decision against objection

Raymond Pfeiffer and Ralph Forsberg, editors, Ethics on the Job: Cases and Strategies (Third Edition, Wadsworth, 2004).

Davis 7-Step Process1. State problem2. Check facts3. State specifications4. Develop list of five options

6. Make a tentative choice7. Make final choice

A. Harm testB. Publicity testC. Defensibility testD. Reversibility testE. Virtue testF. Professional testG. Colleague testH. Organization test

Michael Davis, “Developing and Using Cases to Teach Practical Ethics”, Teaching Philosophy, Volume 20, December 1997, pp. 353-385

5 TEST OPTIONS

Markkula Framework1. Recognize an Ethical Issue2. Get the Facts3. Evaluate Alternatives

4. Make a tentative choice5. Make final choice

Markkula Center for Applied Ethics at Santa Clara University.

Ethical Perspective

Plus

P = Policies

L = Legal

U = Universal

S = Self

Connects.ethics.org

Define Problem

Define Possible

Solutions

Evaluate Alternatives

Implement the

Solution

Evaluate Outcomes

Apply Ethical Decision Making Process

Code of Ethics/ConductOrganizationalProfessional

ETHICAL DECISION

APPLY

MODELCODE

Institute of Internal Auditors

Professional Code

of Ethics

FRAMEWORK

INTEGRITY

OBJECTIVITY

CONFIDENTIALITY

COMPENTENCY

ethicsE

SummaryIntegrity – 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.

Internal Auditor Ethical DilemmaProblem – 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.

Alternatives1. 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.

Evaluation of the Solutions

Alternative Solutions1. 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 EthicsIntegrity

Objectivity

Confidentiality

Competency

Internal Auditor Ethical DilemmaImplement the Decision

Issue the audit reportReport the President’s action on the Whistleblower Hotline.

Evaluate the OutcomesThe President terminates you.You can still sleep at nightHuman Resources investigates the whistleblower reportYou are reinstated with back pay.

Hershey’s, Code of Ethical Business Conduct, Hershey, Pa. retrieved from www.thehersheycompany.com

http://www.thehersheycompany.com/

Hershey’s Code of Ethical Business Conduct

OUR COMMITMENT TO STOCKHOLDERSWe 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

http://www.thehersheycompany.com/

Ethical DilemmaProblem – 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.

Alternatives1. 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.

Evaluation of the Solutions

Alternative Solutions1. 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 ConductMaintain Stockholder Trust

Maintain Consumer Trust

Comply with Global Trade Laws and Support Communities

Deal Fairly with Business Partners, Competitors, and Suppliers

Ethical DilemmaImplement the Decision

Assess and upgrade current inspection processes.Take action based upon the results of the assessment.

Evaluate the OutcomesThe company may need to conduct an inspection sooner than

plannedYou have eliminated the risks of bad press and resulting reduced

market share.

Implementation of the CodeWrittenAcknowledgedTrainingEmbedded in the culture

Evaluation

Socrates concluded that, “Ethics consists of knowing what we

ought to do, and such knowledge can be taught. “

DO YOU KNOW WHAT YOU DO NOT KNOW?

ETHICAL BUSINESS EVALUATIONInternalExternal

THANK YOU!



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Questions?



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