Code of Ethics / Code of Conduct Research Project for Emerging Issues/ Advanced Topics Course Diploma in Investigation and Forensic Accounting Program Prepared by Sonia MacIntosh-Dobson 1 June 04 For Professor Leonard J. Brooks Joseph L. Rotman School of Management University of TorontoTABLE OF CONTEN' 1.0 Introduction .. 2.0 Background . 3.0 Scope of Report ... 3.1 Objective .... 3.2 Specific Procedures 4.0 Definitions .. 5.0 Discussion and Analysis of the NSCC ea aan se 5.1 Mission .. 5.2 Values . 5.3 Possible Stakeholders . 5.4 Board of Governors .. 5.4.1 Intemal Control .. $.4.2 Role of the Board of Governors .. 5.5 Professional Associations and Their Codes 5.5.1 Conflict between Professional Code and Employer Code ...... 5.6 Student Association .. 5.7 College... 5.7.1 Trust .... 5.7.2 Students .. 6.0 What is needed? 6.1 Code of Ethics / Code of Conduct 6.1.1 Why do you need a Code? 6.1.2 Accountability ........ 6.1.3 No written code 6.1.4 Psychology of Ethical Lapses ..... 6.1.5 University Codes .. 6.2 Corporate Governance 6.2.1 Internal Control ....6.2.2 Whistleblower Protection 6.2.3 Fraud Policy 6.3 Writing the Code . 6.3.1 Ethics Program . 6.3.2 Creating a Value-Based Organization ........ 6.3.3 Guidelines for writing a code of ethics: Deloitte and Touche 37 6.4 Implementing the Code ...........0-cscsesserseeeesseees pa A0) 6.4.1 Communication .... on 41 6.5 Benefits of a Code 41 6.5.1 Benefits to the College if it decides to have a code . 41 6.6 Ethical Decision-Making Process .. 42 6.7 Committee to Develop the Code .... 43 6.7.1 Breaches of the Code .. 44 6.8 Format/Outline of a Code 45 6.9 Ethics Committee of the Board of Governors 2 45 6.10 Ethics Officer / Ombudsman . 47 48 6.10.1 Ethics Officer: Reporting 7.0 Ethics Audits ....... 8.0 Research Ethics Boards . 9.0 Conclusion and Recommendations . on 52 Bibliography .. 254 60 Appendix 1 - Board of Governors’ Documents .. Appendix 2 - Student Association - Code of Ethics/Human Rights .... aon 16 Appendix 3 — Great Expectations .... Appendix 4~ Table of Contents ~ NSC Policy Manual ..1.0 Introduction “The very exercise of developing a code is in itself worthwhile; it forces a large number of people ... to think through in a fresh way their mission and the important obligations " they as a group and as individuals have with respect to society as a whole. Is a code of ethics or code of conduct needed in a post-secondary educational institute? ‘The purpose of this research paper is to determine if the Nova Scotia Community College (NSCC) needs to develop a code of ethies/conduct. The analysis attempts to explain why a code is needed: the benefits to having a code, how to write a code, and how to implement a code once it has been developed. This paper does not delve into the area of Research Ethics Boards (REB), as ethics in this area deals with the ethics associated with research involving humans in any context, The College is currently making application to set up a REB. ‘The College is at a point where it needs to decide what to do next. The next logical step ‘would be the decision of whether or not to adopt a code of ethics/conduct. The College is a not-for-profit post-secondary educational institute that is partially funded by the Provincial Government. It has over 1,200 employees and over 8,000 full-time and 20,000 part-time students. An organization of this size needs some day-to-day guidance in dealing with ethical decisions. The Provincial Government expects the College to be accountable for the proper spending of the govemment money. Taxpayers of Nova ' DeGeorge, Richard T. “Military Ethics: A Code of Ethics for Officers”. Washington: National Defense University Press, 1987. p. 1. hitp:/www.ethicsweb.ca/codes/coez.btmnScotia also expect that the government money will be spent properly within the College system, ‘There currently exist many different policies within the College. Employees are expected to know the various policies and have their day-to-day decisions conform to these policies without the privilege of ethical decision-making training and a clear understanding of acceptable behaviour. In this manner, you run the risk of having each person interpret the policies in many different ways so there may not be consistent adherence to the policies. There are many examples of other university and college codes available, The College will not be the first, or, hopefully, the last to develop a code of ethics/conduct for all employees, governors, and students. 2.0 Background In 1998, the College has developed its mission, vision, and values. Since there are currently many stand-alone policies within the College environment, covering many issues pertaining to academic and employee behaviour, there are some people that believe that there is no need for a code of ethics. Others feel that the codes of ethics within the Collective Agreements are strong enough to handle employee issues if they arise. The only problem with this idea is that allemployees do not fall under the Collective Agreements - so there is no universal code that everyone would have to respect. Also, the language in the Collective Agreements is not strong enough nor does it deal with all the issues that the College should deal with in today’s work environment.” 3.0 Scope of Report 3.1 Objective This research paper attempts to analyze why a post-secondary educational institute would need a code of ethics by identifying a list of reasons why a code is needed as well as possible benefits to having a code for the institute. 3.2 Specific Procedures The first step that was performed was a literature review of what currently exists for codes of post-secondary educational institutes. The review considered codes of ethics and codes of conduct for employees and students. The second step was to gather best practices from both Canadian and American Universities and Colleges. Many Colleges and Universities have some form of code. There are still quite a few that do not have a formalized code of ethics or conduct. They do have a form of academic regulations or policies, but they do not relate back to a code. Still some other universities only have the language that is used in the Collective Agreements to use as a means of “enforcing” employees to behave in an ethical manner. 2 NSCC Collective Agreements ~ www.nsce.caMost of the Collective Agreements that were reviewed were compliance-oriented and not value-oriented. There was no discussion of how this was working for these Universities and Colleges. ‘The third step was to review and outline the key issues arising from the research. Within these issues were items that are in the news now. Whistleblower protection is one of the emerging issues for companies, not so much for post-secondary educational institutes, but certainly in “for-profit” companies. There still should be a provision for such a situation in a university or college code. Also, an emerging topic that is creating a great deal of discussion is the “ethics audit.” The ethics audit is in a growing field. There is a section on the American Institute of Certified Public Accountants (AICPA) website that informs its members that this is an expanding field for performing services for their existing audit clients.’ Because this area is so new, there are no standards set for an “ethics auditor” so it is “Let the Buyer Beware.” With the current political climate in Canada, both the Federal and Provincial Governments may require organizations that receive funding over a certain level to have an ethics audit performed when they have the annual financial audit completed by the extemal public accounting firm. The fourth and last step was reviewing the ways that are available to ensure that educational institutes behave ethically. There are a couple of ways that this could happen. First, the Boards of Governors could establish Ethics Committees for the > www aiepa.org/index htminstitutes. These Ethics Committees would be responsible for the implementation and monitoring ofthe code of ethics/conduct. A Iso, the requirement to have ethics audits performed would also ensure that educational institutes behaved properly. This would come to light when the ethics auditor interviewed some of the stakeholders to determine the level of understanding and accepted behaviour (culture) of the organization. Within this area, if the govemments do make it a requirement for continued funding then there needs to be a way to monitor and enforce the requirement with clearly outlined consequences of non-compliance. 4.0 Definitions Throughout this report there are phrases that are used that may not be familiar to all readers. So to lessen the likelihood of confusion, a listing of definitions is included for clarification. Code of Ethics: “A code of ethics states the values and principles that define the purpose of the company. This type of code secks to clarify the ethics of the corporation and to define its responsibilities to different groups of stakeholders, as well as defining the responsibilities of its employees.” * * “Code of Ethics, Practices and Conduct.” http//www.cma-canada org/index.cfim/ei_i/1404/le_id/1 him p.3 22 April 4Code of Practice: “A code of practice interprets and illustrates corporate values and principles, and is addressed to the employee as an individual decision maker. Such a code seeks to shape the expression of the corporation’s stated values through the practices of its employees.”’ Code of Conduct: “A code of conduct says: ‘This is what you must (or must not) do.” Codes of conduct typically consist of a list of rules: “Thou shalt” and “Thou shalt not”. Penalties for transgressions may be identified, and systems of compliance and appeal defined.”* “A best practice code endeavours to educate, communicate, and encourage ethical behaviour through the use of values and guiding principles, balanced with elements of compliance and control as appropriate. (Clarkson and Deck 1993)"” The main difference between the three codes is the level and source of control. For a code of ethics it is self- control, but fora code of conduct it is imposed control. A code of practice is inthe middle, but it still ties the corporation’s values to employee actions. A collaborative approach is used when constructing a code of ethics; whereas, a code of conduct is imposed from the top down onto its employees. Ethics: “n, 1. The study of standards of right and wrong; that part of science and philosophy dealing with moral conduct, duty, and judgement (used with a singular verb). 2. Formal 5 tid. p.3 Ibid. p. 4 "Ibid. p.7or professional rules of right and wrong; system of conduct or behaviour (used with a plural verb)."* Moral: “adj. 1. Good in character or conduct, virtuous according to civilised standards of right and wrong; right; just. 2. Capable of understanding right and wrong. 3. Having to do with character or with the difference between right and wrong. 4. Based on the principles of right conduct rather than on law or custom.”® Corporate Governance: “Corporate governance is a process or a set of system and processes to ensure that the company is managed to suit the best interests of all. It is concemed with the morals, ethics, values, parameters, conduct and behavior of the company and its management.” "® Whistleblower: “Those who disclose information about something they believe to be harmful to the public’s interest, occurring in business or in government. It includes disclosure to authorities within the organization, to outside agencies or the media.”"" * Gage Canadian Dictionary, Gage Educational Publishing Company, Toronto, Ontario, Canada. 1987. 405 Pied p. 742 '® “Corporate Governance in the Era of Globalization - Concept and Its Meaning.” hepv/www.pimanagement.org/proj-co-govn-globalization3,him p. 1. 22 April 04 "' Groeneweg, Sheryl. “Whistleblowing, the act of raising concerns about misconduct within an organization, is a key clement of any governance system's transparency and accountability framework.” October 2001. PS Commission of Canada. p. 1. bttp:/www.canadianlawsite.comywhistleblower.htm 10Professional Code of Ethics: “A professional code states in authoritative form the special standard governing its members, a morally permissible standard everyone in the profession to follow even if that would mean having to follow it too. A professional standard is morally binding because it constitutes a practice from which each participant benefits if others do their share, a practice each voluntarily enters by claiming membership in the profession (and having that membership acknowledged by other members).”" Ethies Officer: “The Ethics Officer is tasked with integrating their organization’s ethics and values initiatives, compliance activities, and business conduct practices into the decision-making processes at all levels of the organization.”"? Ombudsman: ‘An ombudsman is a neutral person designated to provide a safe and confidential place for resolving post-secondary educational institutional issues. This position is an independent and impartial office that is not tied to the formal administration of the organization. "Davis, Michael. ed. “Writing a Code of Ethics”. Ilinois Institute of Technology. Perspectives on the Profession. Vol. 19, No 1, Fall 1999. p.2. " Bthies Officer Association, p. 1. http://www.coa.org/Whatis.asp u5.0 Discussion and Analysis of the NSCC 5.1 Mission The Nova Scotia Community College (NSCC) completed a lengthy strategic development phase in 1998. This process included many community and government meetings to get the views of the various stakeholders. From this process the College developed its Mission Statement, Vision, and Values. The Mission Statement was creative and tied its raison d”étre to the economic direction of the government: “Building 's economy and quality of life through education and innovation.”"* 5.2 Values If it is determined that NSCC needs a code of ethics, the eight (8) values of the College would need to be incorporated into this document. The eight (8) values are as follows: 1, “Student Success — We support, recognize, and celebrate student success. 2. Accessibility - We are committed to providing greater access to College programs and services 3. Service — We reach out to people to help connect our programs and services to their needs. 4, Respect ~ We develop our working and leaming relationships from a foundation of mutual trust and respect. 5. Collaboration — We reward collaboration, diversity of expression, and decisiveness. 6. Innovation - We value innovative ideas and actions that engage students, employers, and communities in learning and development. SCC Strategic Plan. www.nscc.ca 31 March 04 12Public Accountability - We are responsible and accountable for the public’s ‘trust. 8. Diversity - We believe that diversity in the College community is a strength that must be cultivated.”"° 5.3 Possible Stakeholders Possible stakeholders (in no particular order) in the College’s code of ethics would include: 1, Faculty 2. Staff and Management 3. Students 4. Local Community (not just for committees, etc. but also proper procurement procedures for local businesses) 5. Provincial Government (funding agent as well as Department of Education) 6. Unions and their Collective Agreements (Nova Scotia Teachers Union (2) and Nova Scotia Government Employees Union) 7. Professional Associations with members at the College 8. Alumni 9. Suppliers (both in and outside the local community) 10, Board of Governors 11, Nova Scotia Taxpayers "5 NSC Strategic Plan. www.nsee.ca 31 March 04 13If the College decides to move forward with the idea of writing a code of ethics, then a committee consisting of representatives from the above list should be struck (see section 63). 5.4 Board of Governors The Nova Scotia Community College (NSCC) must abide by the Community Colleges Act 1995-96, ¢. 4. Section 63(1) specifically relates to the “Duties of Board” Subsections of note, that could be referenced in a possible code of ethics/conduct if one were to be developed, include ... (i) develop and adopt conflict of interest guidelines for members of the Board and employees of the College; (j) establish a public tender and procurement policy; (k) establish a fair hiring policy; (1) establish a performance- evaluation system for employees of the College; (m) establish a policy to prevent harassment and discrimination of students and employees of the College; and (n) subject to the approval of the Minister, establish an admissions policy for the College. These particular policies mentioned in the subsections of section 63(1) would not need to be a formal part of the code of ethics but would instead be referenced as existing documents and show the relationship to the code of ethics by relating these policies to the core values of the College. As outlined above, subsections (i) and (j) relate to public accountability; (k) relates to respect and diversity; (I) would relate to respect, innovation and public accountability; (m) relates to respect and accountability; and (n) relates to accessibility, diversity, and respect. 145.4.1 Internal Control Over the past several years, the trend has been that internal control of an organization is part of the responsibility of the Board. This is part of the Corporate Governance (see also section 6.2.1). A strong intemal controV/audit department helps the organization stay on track and hopefully limit any misconduct or unethical behaviour within the organization. In the College, the Director of Internal Audits reports directly to the Board of Governors. If the College were to develop a position for an Ethics Officer/Ombudsman, this person should work closely with the Department of Intemal Audits. “Character demonstrated by actions, not by intentions, is the only reliable measure of corporate ethies.”"° “Ethies or compliance programs utilize internal policies and procedures to prevent and detect violations of law, regulations, and rules, and to promote ethical behavior by and within the company. C ommon elements of such programs include: codes o f conduct; communication of standards through training; methods to encourage employees to report possible violations to management, enforcement mechanisms through investigation and discipline; and oversight and review to achieve ongoing improvement.” 'S Entine, Jon. “Corporate Ethics and Accountability”, P. 6. hnpu/www.compgov.nev/ forums/commentary/entinel htm! 22 April 04 "" “Boards of Directors Getting More Involved In Companies’ Ethics Program” The Conference Board. 4 March 04. hups/www conference-board org/utlities/pressDetail.cfm?press ID=2344 p. 1. 7 April 04 15The College currently has a document outlining the various roles and responsibilities of the positions with the Board of Governors. These outlines for positions include Chair, Vice-Chair, and the role of the Governor. Also included in the Board documents is an outline of the Governance Model. (These roles and responsibilities can be found in Appendix 1.) There should not be a separate code of ethics for the Board of Governors. Some organizations do need a separate document listing the differences between by-laws and conduct for Board Members. Due to the fact that the Board of Governors are all volunteers and the Chairman must be an external person, a newly formed code of ethics would also apply to the Board of Governors. “The Board has 3 responsibilities with respect to the code. First, determine that the code is consistent with values that most stakeholders will hold in the highest esteem. Second, comply with the code. Third, provide the appropriate oversight to ensure management is operating the business in a manner consistent with the code.”"* If the College moves forward with the development of a code of ethics, the Board will need to ensure that all stakeholders are included in the process. 5.5 Professional Associations and Their Codes Basic principles of Professional Ethics for Lawyers, Accountants, and Engineers, etc.: © Independence; objectivity * Full disclosure "bid, p. 4 16© Due diligence; duty of care ‘© Confidentiality * Adhere to professional responsibilities ‘* Avoiding conflict of interest situations Ethical principles must all be applied by everyone. A person cannot be selective about which principles to respect. 5.5.1 Conflict between Professional Code and Employer Code Currently in the College, some employees are members of professional associations that have either code of ethics or conduct. There may come a time when there is a conflict between the professional code and the employer’s code. If this occurs, discussions need to occur between the company Ethics Officer/Ombudsman and the professional to try to resolve this issue. If the Ethics Officer/Ombudsman is not able to give the professional an answer with the proper comfort level, then the professional should consult his/her respective association for clarification or guidance, (See also Holland College, section 6.1.5 Other Universities.) “In order for codes to be effective, they must be clear, consistent, and congruent with the company’s culture, values, policies, and ground rules.”"? °° Clarkson, M. B. E. and Michacl Deck. Applying the Stakeholder Management Model tothe Analysis and Evaluation of Corporate Codes, The Centre for Corporate Social Performance and Ethics, University of Toronto, 1992. 15 May 04 175.6 Student Association There is an existing “Code of Ethics/Human Rights” as established by the NSCC Student Association (Appendix 2). What is really needed is a code of conduct that outlines acceptable and unacceptable behaviour. If a code of conduct, along with a copy of the academic policies of the College, were provided to every enrolled student, then there would probably be fewer infractions of the behaviour code and policy as each student would be aware of the various levels of behaviour and the consequences of such behaviour. Some examples of unacceptable behaviour would include verbal and physical abuse to other students and employees of the College, cheating on exams, stealing exams, and plagiarism. The College as of August 2003 has developed a document titled “ Great Expectations: Clarifying Academic Climate and Conduct Guidelines at NSCC”. This document is attached as Appendix 3. This document is discussed with each program of study on each campus during the two (2) months of September and October of each academic year. The two (2) people that lead the discussions are the Team Leader (Great Expectations) and the Chair of the Harassment and Discrimination Committee (Harassment and Discrimination Policy). By having both of these people discuss their respective documents, the students know what is expected of them and how to get more information on how to make a formal complaint. The committee that developed the “Great Expectations” document consisted of Department Heads, the College Registrar, faculty members and students. At 18this point, there is no formal sign-off for students; each gets a copy of the “Great Expectations” document and academic policies. 5.7 College 5.7.1 Trust ‘The College, as well as any business, works on a basis of trust. There are two (2) areas to promoting trust as a result of ethical behaviour: 1. What the leaders of the College do — actions and tone from the top. If senior management and Board of Governors act ethically, then other employees know that there is value in the Code of Ethics. 2. How employees of the College interact with students and suppliers. If the employees do not act in a trustworthy fashion, then this will have a bearing on the perceived level of trustworthiness of the College. Does the College follow through on promises made either to students or suppliers (e.g. pay bills on time, etc.)? The Code could be given to suppliers so that they know how the College will respond to the receipt of gifts, bribes, and gratuities. If the College decides to develop a code, it will need to be done in a way that fosters trust with the employees. As part of the big picture in the College, all employees have to work towards what is known as “Ethical Congruence.” This entails aligning the College’s stated values to the 19decisions made by senior management, behaviours that are required by the existing systems, and the values of the employees. In order to get the Ethical Congruence, the College must have a clearly stated set of values that have been articulated to all employees of the College. Also to be included in this congruence plan would be the following: ‘* Providing a code of conduct for day to day operations for all employees (these would, be our existing policies - harassment and discrimination, academic policy, fair hiring, fraud policy, etc.) and guidelines on how to use the policies. * Develop measurements for the effectiveness of the College's ethics program. * Develop support mechanisms for employees so that they can make ethical decisions, The next step would be to allow all employees access to the proper training regarding their individual responsibilities regarding ethics in the College. 5.7.2 Students ‘The Student Association’s Code of Ethics/Human Rights does not discuss everyday operational functioning in a classroom, nor does it relate acceptable behaviour back to the College values. The document “Great Expectations” does relate expected acceptable student behaviour both in and out of the classroom; it also relates the sections back to the Academic Policy (part of the NSCC Policy Manual ~ table of contents is located in Appendix 4), which also relates the behaviour back to the College values. So the College is already making sure, even without a formal Code of Ethics, that the policies for 20employees and students relate to the College values. The College already knows its values; in various programs by incorporating the College values into the curriculum, the College currently teaches its values. The College is on its way to living the values, and over a short period of time the values have been embodied. This does not mean that the overall “Code” is not needed, The code would bring the College values to life and give them a prominent place in everyone's mind. ‘As a post-secondary educational institute, the College teaches ethics to students in various programs to one extent or another. In January 2005, there will be a full semester course in Ethics for students taking Business Administration with a concentration in Accounting. If the College is going to do more than just touch on it in other courses, the College needs to be living it in real life. You cannot just teach it; you must actually do it and be seen to be doing it. Otherwise, the value of teaching students is lost and the College will have failed in not preparing them for the real world outside of campus protection, The College would be missing out on the perfect example of living and working in an ethical environment. At the very least, look to find examples of good ethics and reward that behaviour; work to attain the highest ideal. Don’t just look for the violations of a code; look for the good examples and highlight those; make them part of group discussions. Ethical behaviour should be held up as the example of what to do in day-to-day life, not just when something goes wrong and then people go back to following the code of ethics. 216.0 What is needed? 6.1 Code of Ethics / Code of Conduct If the College decides to develop a code of ethics for its employees and a code of conduct for students, there should be an ethics confidential hotline; so that someone could call and get advice regarding possible solutions or steps to take for reporting potential breaches of the code. From various studies conducted by Gary R. Weaver et al”, there should also be a dedicated person, either an Ombudsman or an Ethics Officer, to answer the questions and possibly do the investigations. That dedicated person should not be in the legal department because it will be compliance-oriented or compliance-based. If the dedicated person is in the Human Resources D epartment, then it will be more value-oriented or value-based. The studies indicate that there is a higher success rate with “value-oriented” systems. “A code is also a tool to encourage discussion of ethics and to improve how employees/members deals with the ethical dilemmas, prejudices and grey areas that are encountered in everyday work. A code is meant to complement relevant standards, policies and rules, not to subordinate them.”*! % Trevino, Linda K. and Gary R. Weaver. 2001. “Organizational Justice and Ethics Program “Follow- Through”: Influences on Employees’ Harmful and Helpful Behavior”. Business Ethics Quarterly. Volume 11, Issue 4. pp 651-671. _ Weaver, Gary R. and Linda K. Trevino. 1999. “Compliance & Values Oriented Ethics Programs: Influences on Employees’ Attitudes and Behavior.” Business Ethics Quarterly Volume 9, Issue 2. pp 315-335. 2" “Why have a Code?” Ethics Toolkit. hitp:/www.ethics.orwwhycode html p. 1. 8 April 04 26.1.1 Why do you need a Code? C Post-secondary institutes may develop a code due to pressure. This pressure may come from the Board of Govemors, employees, Unions, media, government officials, the p ublic, o ther post-secondary institutes; or it may even come from students that have some life experience that gives them the knowledge that in industry it is common to have codes that you must follow. With a code, it allows the organization to have a shared vision; allowing everyone to adopt and move forward with the strategic plan. It will outline what is acceptable behaviour of the various stakeholders, for items like conflict of interest or conflict of commitment to accepting gifts from suppliers. For students a code of conduct will outline acceptable and unacceptable behaviour. It would also outline their rights and what they can expect from employees of the College. Code of ethics will give College employees a framework in which they can make decisions. If you try to develop a code that attempts to cover every possibility, then people tend to fit situations to the rules instead of trying to make ethical decisions that could be used in many situations. The College teaches student ethics in certain curricula; they are told that they should get a copy, read, and understand their employer's code so that they know what is expected of them as employees, but the College does not have a formal code of ethics/conduct. 23Something that must be remembered when developing a code: There are value-based rules and prohibition-based rules. Value-based is better suited to a code of ethics and prohibition-based is in line with a code of conduct. A code of ethics is a means of uniquely expressing a group's collective commitment to a specific set of standards of conduct while offering guidance in how to best follow those codes. ‘Who could or should be responsible for ethics management within the College? If you have legal counsel responsible, then it becomes compliance based; If you have the Department of Internal Audit responsible, again it becomes compliance based; If someone from Human Resources is responsible, then it is more value based; If left to the Ethics Committee of the Board of Governors, then there may not be enough time or resources dedicated to it because these committee members are volunteers and may not be able to dedicate the required time; Or the College could have an Ethics Officer/Ombudsman, who would be responsible for the Code and also of reporting to the Ethics Committee. This person would need some specialized skills and training. Also, the dedicated person would need ready access to and support from the President of the College. 246.1.2 Accountability According to an article by Frank. Vogl (December 9, 2003) on the Ethics Resource Centre’s website, there are six (6) key points in an ethics framework: 1. Commitment - The Board needs to understand that they are responsible for the Code of Ethics, not only the implementation by management, but also the regular review. ‘The Board needs to make the Code a part of the culture of the College. 2. Accountability ~ Senior management should be tasked by the Board to implement the Code. If there is an Ethics Officer/Ombudsman, this position should have its own budget, set by the Board, so that there are enough resources to implement programs to encourage employee buy-in for the ethics policies. 3. Policies — The Board needs to establish a committee (non-executive independent Directors) to develop clear policies, including performance objectives, which are based on the Code, As part of this implementation, there needs to be an effective training program, full evaluation, and employee surveys. 4, Compensation — The Board needs to understand that the compensation of top ‘management can be seen as an ethical issue, The compensation committee should be non-executive, independent Directors of the Board of Governors. 5. Communications - The Board is responsible for the Code, the policies to support the Code and managements performance respecting the application of the Code and that this is reported truthfully to all employees. 6. Leadership — The President needs to have encouragement from the Board to be a leader in the field of ethics both inside and outside the organization. 25For the College, the areas of commitment, accountabilities, policies, communication, and leadership are extremely important. If the College is to move forward on this issue of ethics, then there needs to be a budgetary commitment to do it right. If the College is not going to fully support the effort, it would be better not to do anything. Doing only half of a job is worse than doing nothing at all. If you have a code, or even a particular policy, that has no backbone or authority, it is a waste of time for employees. If the employees do not see a positive change after a Code is implemented, you have lost any chance of getting their help in the future to deal with ethical issues. Many employees have been following the newspaper articles regarding the “Enron's” of the world. Employees know that Enron had a Code of Ethics and this can still happen to them. ‘The College will not ‘want people to say that they have a Code, but it is only lip service to cover due diligence and hopefully protect the College in a lawsuit. In an article published in Business Week online, Stuart Gilman, president of the Ethics Resource Centre, in Washington, D.C., is quoted by Heesun Wee, as saying, “But at Enron, ethics was simply a piece of paper with three Ps — print, post [in the company lunch room], and then pray that something is actually going to happen.” The College takes pride in being national leaders in various areas of the post-secondary educational field; it would not do the reputation of the College any good to have something like the above comment made about its version of a Code of Ethics. Employees’ ethics will be influenced by their immediate supervisor and co-workers. If they see that the people that they report to do their business in an ethical manner and remind people of the College values in normal day-to-day functioning (not just when a 26situation occurs), then employees tend to model that same behaviour. If the behaviour, as, well as the discussion, is modelled on a regular basis, it becomes the habit and the accepted way of dealing with everyday situations. Employees need to know that their ethical behaviour will be supported by people up the line. As stated several times throughout this report - “Tone at the Top” is very important. There are four (4) areas of concern for ethical leadership to occur in any organization: 1. Purpose ~ ethical leaders’ actions flow from the organizational purpose. 2. Knowledge ~ ethical leaders have the knowledge to act appropriately. 3. Authority ~ ethical leaders have the authority to make decisions but also realize that others involved must have the authority to share what they have and know. 4, Tnust — the ethical leader exemplifies trust throughout the organization, 6.1.3 No written code The fact that a company does not have a written code does not necessarily mean that there is a lack of commitment to ethical behaviour. The College does not currently have a written code of ethics but does have a collection of stand-alone policies that employees and students use. As long as the policies and any infractions are handled consistently for all employees, then a formal code may not be necessary. If situations are handled on a case-by-case basis and employees feel that there is no consistent handling of similar situations, the organization could be in trouble with respect to the employees help with ethical dilemmas. 27On the other hand, if a company does have a written code of ethics, this does not guarantee the ethical behaviour that is needed in companies today. If the infrastructure for enforcement and culture is not there to support an ethical environment, it does not matter that the code is written down. A case in point would be Enron. They had a code of ethics and look what happened to them! “While a written code formalizes certain aspects of the organization’s commitment to ethics and is an important part of the total fabric, itis neither a panacea nor a substitute for a commitment by managers at all levels of the organization to strong ethical practices." “Results show that when employees perceive general organizational justice and ethics program follow-through, there is less unethical behaviour and greater willingness to report problems.””? If employees believe that the organization is not going to follow-through on unethical behaviour that is discovered, then the possibility that it will increase is higher. As outlined in the DIFA program in several courses, GONE stands for: G ~ greed, O — opportunity, N ~ need, and E — expectation of being caught. If the expectation of being caught is low, then the incidence of fraud or other unethical behaviour increases. There must be follow-through on reported incidents and there must be fair discipline for the ® The Bulletin, 2003. Protiviti, volume 1, issue 5. http/protivi.com p. 2 19 April 04 ® Trevino, Linda K. and Gary R. Weaver. 2001. “Organizational Justice and Ethics Program “Follow- Through”: Influences on Employees’ Harmful and Helpful Behaviour.” Business Ethics Quarterly. volume U1, issue 4. p. 651 28violations. If neither part occurs, then employees will not be a part of the process because they will ask themselves “Why would I report this to help the College? They are not going to do anything about it anyway!” 6.1.4 “Psychology of Ethical Lapses” Good people can make bad decisions. Without a framework in which to help employees make ethical decisions, good people could indeed make a lot of bad decisions. If employees know how to make ethical decisions then better decisions can be made for the organization. These decisions can help make the culture of the organization. As stated in “The Psychology of Ethical Lapses” by Mark Johnson, “Cultures do not make decisions. Decisions make cultures.” People who make unethical decisions rationalize the decisions one (1) of four (4) ways: 1) everybody does it; 2) it’s no big deal; 3) the problem will go away; and 4) get along by going along. By using a rationalization for the bad behaviour, the person has lowered the level of expected or accepted ethical b ehaviour down toa level that he/she can justify. 6.1.5 University Codes In the Code of Ethics and Conduct for Holland College (Prince Edward Island), section 1.02 Service to Students and Industry, subsection iii states “All College employees who are members of occupations or professions having established standards of conducts/ethics shall, in addition to any obligations and responsibilities described in these Regulations, be bound by the standards of conduct/ethics applicable to such occupations 29or professions."** So Holland College has formalized in their regulations that an employee in this situation is bound by both codes — internal and extemal to the College. If the NSCC does develop a code of ethics, this may need to be stated in a similar fashion because of the number of employees that belong to professional associations (accountants, lawyers, engineers, etc.). Also of note, Holland College only requires their employees to sign-off on the document once and then it is kept in their personnel file. After a review of various University and College “codes”, it seems that some post- secondary educational institutes use “code of ethics”; “code of conduct”; “code of business conduct”; “code of student conduct”; yet others do not seem to formalize their policies into codes but do have “Academic Regulations” that cover acceptable and unacceptable behaviour of students. Alll of the post-secondary educational institutes that were reviewed covered very similar items including: cheating, plagiarism, disruptive behaviour, alcohol/drug use, discrimination, harassment, procedures and appeal process, and also penalties and sanctions. In none of the codes that were reviewed was there a section or a requirement to have students sign-off stating that they have read and understood the “code” as it was presented to them. Nor did these documents state how or when the students were to receive copies of the “Code.” Something of interest in the Statement of Purpose in the Howard University Code of Ethics and Conduct is on page 3 in section I, its states “This document is not intended to be a procedural manual or an exacting account of proscribed conduct.” This is interesting * “Code of Conduct for Learners”. Holland College Operational Guidelines. Section 1.02 30because it puts the onus back on the employee and/or student to do the right thing and make the ethical decision. It also tells you that if you require clarification to contact the University Compliance Officer (who happens to be the General Counsel for the University). This direction is a good idea so that hopefully confusion as to what to do can be kept to a minimum. The document also outlines in section II on page 3, to whom the code applies — this also is a good idea. ‘ode of Ethics ~ Guidelines for Ethical Actions”. In Concordia University has a “ Chapter 5 — Attending to Ethics, it describes the process to follow in thinking through the situation, It does not give you a list of things not to do; it tells you the ways to raise, consider, and resolve ethical issues. This is the only post-secondary educational institute that has been researched that outlines ethics in this manner. T his is a unique way of having employees and students make ethical decisions. Also of importance in one of the footnotes (footnote 1) listed on page 15 of the document, “Activities not explicitly forbidden by this Code are not necessarily thereby permitted.” This type of comment is very important to make so that people reading the document know where they stand. 6.2 Corporate Governance The Board of Governors need to understand that i f someone wanted to come forward with information regarding an ethical situation, there needs to be a “safe” reporting mechanism to make management and staff accountable and that problems can come to light before they cause too much damage to the College. 31The College, by way of the Board or Executive Team, should determine if background investigations/checks need to be done on employees or potential employees who have applied for a position with a high level of discretionary responsibility (e.g. Principals and higher). The Ethics Committee could be tasked with this if the College decided to implement such a procedure. This would be done so that a person’s character can be assessed before being hired. It is difficult to determine someone’s ethical background from an interview alone. 6.2.1 Internal Control Another benefit of clearly stated and communicated standards of ethical conduct would result in more effective intemal controls which, in turn, would reduce fraudulent activity within the organization. 6.2.2 Whistleblower Protection Currently, there is proposed legislation for the protection of whistleblowers for government employees. This legislation, if ever passed, will not affect the employees at the College so if the College writes a code, it will need to have a section on whistleblowers and possible protections. A s part of the ethical culture that the Board should foster, the Board will need to be a part of the development of a hotline or Ethics Officer/Ombudsman and whistleblower protection. 32“Bthically effective organizations both provide employees with a safe means to report misconduct and protect individuals who do step forward."”* 6.2.3 Fraud Policy The fraud policy of the College is directly tied 10 the College value of public accountability. The College receives Provincial Government funding and they must show proper care and stewardship of this money. The fraud policy as yet is not part of the formal NSCC policy manual. It is a separate stand-alone policy that has received Audit Committee and Board approval. 6.3 Writing the Code A code of ethics/conduet, if agreed to by the College: i) should be a code that covers all employees, as well as the Board of Govemors. The Board should not have a completely separate code. ii) should include a process for “whistleblowers” to make contact with someone and should outline the procedures and protections offered. ifi) should result in an ethics committee of the Board of Governors being established. The Ethics Committee could be responsible for changing and updating the code as they, in conjunction with a dedicated Ethics Officer/Ombudsman of the College, would also be part of the investigative arm and would be in a position to recommend changes so that the 8 “Corporate Capabilities”. Ethics Resource Center Research Department. htpu/www.ethics.ore/i_corprate htm p. 2. 16 April 04 33code remains a living document. One that would be used and not sit on a shelf collecting dust. Within the code there should be: 1) telephone number of the hotline, if one is used. 2) cross-reference to more information on topics — harassment and discrimination policy, fraud policy, academic policy, ete. 3) telephone numbers, in the above noted cross-reference, for an expert in the subject matter. 4) Reference to where someone could get an electronic copy — College website, Intranet, etc. 5) A statement on disciplinary actions. This would need to be jointly developed with the different Unions and the College. Things to consider if the College does write a code: > The College would need to define the purpose for the code ~ values oriented or ‘compliance oriented. > Determine if the new document is to be used for guidance or to set requirements ~ Is it to be a Code of Ethics (guidance) or Code of Conduct (requirements)? > The “Code” needs to be tailor-made for the College. > The Committee that will review and help structure the Code will need to determine if there is to be an enforcement section in the Code. This would need 34to be done in conjunction with the three (3) Collective Agreements, This is why all stakeholders must be represented at the Committee table, As mentioned before, the Code will need a communication plan when it is ready to be implemented. As a subcommittee of the Board of Govemors, the Ethics Committee would be responsible for reviewing and revising/updating the Code. As part of the process, the College must remember that the group that is asked to help develop the Code must fairly represent the employees and Board of the College. This does not just mean a representative from each Union, Board, school, etc. It means that representatives will be speaking for more than just themselves; they are representing the stakeholders. So there should be Department Heads; Managers — Administrative Services; Managers - Customized Training; Deans from the various schools; Principals; various Vice-Presidents; Directors; faculty; support staff; professional support staff; students from Trades, Business, Arts and New Media, Health and Human Services; as well as various minority groups. If the newly formed committee does not represent the intended audience (all College employees), then it may be difficult to reach a consensus on issues and then you may not end up developing a usable Code. 35“Through identification as a member of the group, a member's sense of duty to other members of the group and to the group’s collective agreements expressed in the code is strengthened. As a result, the effectiveness of the code of ethics is also strengthened.” 6.3.1 Ethies Program According to Gary R. Weaver et al, in The Business Ethics Quarterly, “Compliance and Values Oriented Ethics Program: Influences on Employees’ Attitudes and Behaviour”, pp 315 — 335, when a company designs their ethics program, there should be a set of desired outcomes to measure, There must be an evaluation phase for the ethics program so that the organization has a way to determine if it is working or not. It must be measurable. If the Code is values-based and employees can identify with the shared values, there will be greater buy-in to the code. There will be a greater perceived acceptance of organizational support. Also from these studies, it was shown that there is more to gain for an organization if it n has a values-oriented approach to its ethics program.” Ifthe program is compliance- oriented, it stresses the importance of monitoring and non-compliance. * Olson, Andrew. “Authoring a Code: Observations on Process and Organization” Centre for the Study of Ethics in the Professions. Minois Insitute of Technology. tp:/woww jt edu/departmenticsep/publicewww/codes/coe/writing p. 3. 3 April 04 ® Weaver, Gary R. etal. The Business Ethics Quarterly. “Compliance and Values Oriented Ethics Program: Influences on Employees’ Attitudes and Behaviour”. pp 315 ~ 335. 366.3.2 Creating a Values-Based Organization Required actions to establish a values-based organization: * Define values (NSC has completed this task). ‘* Communicate those values (completed this task). * Create support systems for the stated values (this is the stage that the College is at now — do we develop a code of ethies?). * Establish an ethics function (could possibly be the Ethics Committee of the Board). «Ensure supervision of the values (Ethics Officer/Ombudsman). + Have someone assigned the responsibility of interpreting the values (Ethics Committee or the Ethics Officer/Ombudsman). * Recruit and promote individuals who display strong morals and good ethical behaviour (need a measurement tool for internal people). © Train employees how to recognize and make ethical decisions. * Encourage the use of the various ways of reporting breaches to the Ethics Officer/Ombudsman or the Ethics Committee. © Find a way to reward ethical behaviour (does not always need to be monetary). * Set up a system so that the Ethics Committee can remain current with renewing the values and the code if one is developed. 6.3.3 Guidelines for writing a code of ethics: Deloitte and Touche One of the recommended elements of a code of ethics/conduct, as stated in a report by Deloitte & Touche, is the outlining of disciplinary action(s) that can be taken for 37unethical behaviour (up to and including termination).”* In order for this to be effective at the College, the three (3) Collective Agreements and the respective Unions would need to have buy-in to the entire code and the different levels of discipline for various violations of the stated code of ethics/conduct. One thing that must be seen by all employees is that for similar violations, the disciplinary action is equivalent — it does not depend upon job title or position (same punishment for all). ‘Also as part of the code, there should be generic examples describing what acceptable behaviour is, and if the employee is still confused, then the Ethics Officer/Ombudsman’s telephone number should be listed for more help and clarification. A copy of the Table of Contents of the NSC Policy Manual is included as Appendix 4. Possible topics that could be in the code include: * Accurate records and financial recordkeeping/management and retention (outlined in the College’s Financial Policies). + Bribery — not outlined in any existing policies though generally understood because it is a Criminal Code offence. * Supplier/vendor/contractor-related risk (included in the Financial Policies), © Communications on behalf of the College (currently standard operating procedure is for Public Affairs to handle official communications) need to be outlined further. * Deloitte & Touche, “Guidelines for Writing a Code of Ethics”. pp. 1-3. 38Must maintain compliance with other Professional standards including the codes of CAs, CGAs, CMAs, APENS, NS Barrister Society, NSTU, NSGEU, Social Workers, Licensed Practical Nurses, and Counsellors. There are employees of the College that belong to these extemal professional bodies and they cannot breach their respective codes — so the College must be aligned with these existing codes and their values. Conflicts of interest (exists currently in the NSCC Policy Manual). Corporate Governance (currently exists in the Board of Governors documents). Discrimination, diversity and sexual harassment (all have existing policies — found in the NSC Policy Manual). Use of drugs and alcohol while on College property (found in the NSCC Policy Manual). Expense and travel reimbursement (exists in financial policies and travel policy). Electronic professional conduct (emails, chat rooms, inappropriate websites — included in the computer usage policy). Fraud and acceptance of gifts, entertainment, and favours (currently outlined in the NSCC Policy Manual as well as the Fraud Policy). Issue of outside employment (currently is addressed in the NSCC Policy Manual as conflict of commitment). Personal conduct — (relates back to the values of respect and accountability). Procurement and purchasing — (in the financial policies). Use of company resources and property (currently found in the NSC Policy Manual). 39* Computer usage and security - (computer usage policy ~ this policy applies to both students and employees). * Workplace safety (not Occupational Health and Safety) — a more formal policy is needed — currently an unwritten policy is in place. 6.4 Implementing the Code When an organization tries to implement an ethics policy, there are four (4) things that should occur: First, the person at the top (in NSCC’s case it could be the President or the Chairman of the Board of Governors or both) should include a letter of support with the document outlining the ‘tone at the top” and giving weight or value to the document. Second, there should be a communication plan outlining how people will be informed of the document and any related training being offered. Third, there has to be sign-off or acceptance by the staff and students for this document. For the students this could mean that they sign the student code of conduct outlining that they have read and understood the document. For existing employees of the College, this sign-off could occur during the annual performance appraisal meeting. It could also be included in the orientation packages for new employees of the College. By having the annual sign-off as a requirement, this keeps the topic on people’s minds and shows that the College is taking this issue seriously. Fourth, there needs to be a mechanism to review the code and allow changes. 406.4.1 Communication ‘There needs to be a least two (2) channels of communication. One to train employees and the other to have employees to report suspected unethical behaviour. 6.5 Benefits of a Code 6.5.1 Benefits to the College if it decides to develop a code 1. increased job satisfaction 2. reduction of perceived misconduct by other employees 3. improved communication regarding what is expected of employees and students 4, increased trust in all levels of management of the College 5. greater consistency in decisions made by the College 6. decrease in the possibility of legal violations and regulations 7. increased respect for the College because of consistent decisions regarding ethical issues (separate from job satisfaction). From the article “Do the Right Thing”, the author Jennifer J. Salopek, references the “2000 National Business Ethics Survey: How Employees Perceive Ethics at Work”, this survey was prepared by the Ethics Resource Centre in Washington, D.C. and it outlines seven (7) benefits of having an ethics program at work: «Recruiting and retaining top-quality people © Fostering a more satisfying and productive work environment for employees © Building and sustaining a company’s reputation within the communities in which it operates 41© Maintaining the trust of employees to ensure continued self-regulation ‘© Legitimising an open dialogue concerning ethical issues «Providing ethical guidance and resources for employees prior to making difficult decisions «Aligning the work efforts of staff with their company’s broader mission and vision”? 6.6 Ethical Decision-Making Process Part of the ethical decision-making process needs to be “the questions.” These questions can be formatted in different ways but the gist should be the same. Sample questions: 1) Is it legal and ethical? Within this framework ask yourself: Does it violate criminal or civil law, does it violate an existing Policy, an Industry or Professional Code; or does it violate my personal values? 2) Isit something you could tell your family? 3) If the information got out of the organization and into the public, how would it look in the newspaper? If there is a reporting hotline, the number should be printed in the code of ethics for ease of reference. Also, it should be stated that the hotline is strictly confidential. ® Salopek, Jennifer J. “Do the Right Thing”. T'd& D Magazine, July 2001, v. 55, . 7, pp 38-44. 7 May 04 a2Ethical decisions are not based on individual values but on a societal basis. It isnot based on what one (1) person believes to be right and just, it is based on what society believes to be right and just. Ethical decisions can be made using four (4) ethical questions or “filters.” The mnemonic PLUS outlines these filters: P—Policies Is the decision in line with the existing College policies and procedures? © L-Legal Does the decision meet the legal requirements of Nova Scotia and Canada? © U-Universal Does the decision stand up to the universal values that the College has adopted? © S-Self Does the decision meet my personal standard of what is right, good, honest, and fair?*? 6.7 Committee to Develop the Code ‘Some things the Committee will need to keep in mind when starting to brainstorm and then develop the Code of Ethics/Conduct: «They need to state what they want the code to promote within the College system (include the College’s eight (8) values from the strategic plan). % “PLUS ~ A process for Ethical Decision Making.” Ethics Toolkit PLUS Model. hitpu/www.ethics.org/printable plus model html p.4. 16 April 04 43© They need to outline what behaviours they want the Code to prevent (deception, different types of fraud, discrimination, elitism, etc.). * Incorporate the common values found in most codes (these can all be related back to the College values): - Truth - Fairness - Respect - Responsibility © Determine what the goals of the Code will be; this way when the process is complete, the committee will be able to assess whether or not they met their goals. 6.7.1 Breaches of the Code The senior management of the College will need to discuss with the committee of stakeholders that will develop the code of ethics, what they see as options available to employees accused of breaches of the Code. These options are referring to procedural fairness when someone is accused. These options could include the right to confront the person who lodged the complaint; the right to a fair hearing (if one is needed); the showing of the collected evidence against the person; the right to respond. and also to appeal. There has to be a mechanism in place to deal with the faimess to the accused employee. a46.8 Format / Outline of a Code If a code is developed, there are many code formats to choose. Possible format/outline of a Code: © Interesting title (e.g. “NSCC - Words to Live By”) © Letter of support from the Chairman of the Board of Governors or the President of the College * Table of Contents + Preamble or introduction * Values of the College * Code conduct with examples for guidance ‘* Other documents to be used as resources ~ existing policies (e.g, academic policy, fair hiring policy, fraud policy, harassment and discrimination policy, etc.) 6.9 Ethics Committee of the Board of Governors The Ethics Committee, along with the Ethics Officer/Ombudsman, should be responsible for overseeing the enforcement, as part of that responsibility would be ensuring that any and all discipline is consistently and equally applied to all levels of the College. These committee members should also make sure that the College can leam from these experiences. They are only mistakes if you do not lea from them. As part of the Committee’s mandate, it should be the voice of authority when interpretations are needed for any part of the code, The committee should also be the 45body to make recommendation for any changes needed to the code. This will ensure that the “Big Picture” is looked at instead of just “one little area of operation.” This Committee could also be responsible for making sure that there are no conflicts between the existing policies; and if there are, then they could put forward a drafted change to the Board of Governors, With the help of the Human Resources Department, the committee could help structure the certification method to ensure that each employee not only received, but read and understood, on an annual basis the code of ethics, along with the appropriate college policies as supporting documentation. The Committee should not be responsible for doing the investigations into breaches of the Code of Ethics. Also, they should not be involved in the determination of the disciplinary action for individual situations. The Committee needs to ensure that discipline is consistent and that investigations do happen, the Committee should not be intimately involved with the day-to-day fumetioning of these areas. That would be the job of the Ethics Officer/Ombudsman, The Committee needs to display a leadership role in this area, The Committee must be seen as being independent and objective and these two (2) areas should not be compromised or else employees may see them in the wrong role. When violations are reported, the Ethics Committee, with the help of the Intemal Auditor, need to assess why and how the violations occurred. With the knowledge of why it occurred, they can determine what changes, if any, need to be put into place to 46ensure it does not happen again. There may need to be changes in the internal systems of the College. 6.10 Ethies Officer / Ombudsman ‘The Ethics Officer/Ombudsman could be responsible for the hotline if one is chosen and could also do training and seminars on recognizing an ethical dilemma. Having a Code in place is a great step, but having employees that know what constitutes an ethical problem is half the battle. If you do not recognize the problem, it is that much harder to solve. The Ethics Officer/Ombudsman would not be responsible to investigate any complaints or grievance with any of the three (3) Collective Agreements. In order for the Ethics Officer/Ombudsman or Ethics Committee to have the proper level of respect, it needs to ensure that discipline is consistent for comparable situations. It has to be shown that there is not one level of discipline for one set of employees (managers) and another set of rules for other employees (non-managers - union members). But there does have to be disciplinary action for two (2) different sets of people ~ those that knowingly violate the code and those that ignore the violations. The second group are just as guilty of the original offence if they allow the breach of the code to continue. Due diligence on behalf of the College is needed in these types of situations; and everything needs to be, documented for the ethics reporting system, if there is one in place. ‘The Ethics Officer/Ombudsman would be the person responsible for the hotline and the offering of advice to employees who are seeking clarification for an ethical situation or 47guidance with any of the policies of the College. Also, the Ethics Officer/Ombudsman would be responsible for setting the procedures and protection for a potential whistleblower for ethical issues in the College. There would also need to be parameters set for false accusations from so-called whistleblowers. These parameters would act as a deterrent to anyone trying to falsely accuse another employee of wrongdoing. The Ethics Officer/Ombudsman would need to do two (2) investigations in this situation. One for the original situation; and then if it tums out that a false complaint was made, then the false complaint would need to be investigated as to why and what would someone gain in this instance. The hotline is for a “safe” way to report unethical behaviour. So employees need to know that it is private and confidential. Studies by Gary R. Weaver et al have shown if employees feel safe about reporting unethical behaviour, then they will use the reporting mechanism more. Employees need to have that level of trust and comfort with the reporting mechanism. 6.10.1 Ethics Officer: Reporting One of the functions that the Ethics Officer/Ombudsman would have would be the periodic reporting to the Ethics Committee and/or the Board of Governors. This reporting could outline the different type of violations and the number of incidents; the different type and number of requests for information or clarification from the hotline; and the results of the different investigations and the outcomes. This person could also conduct “ethics surveys” and measure the level of awareness and confidence in the systems of the College. 487.0 Ethics Audits Ethics audits are popular in the United States (US) and they are becoming more frequent in Canada. These types of audits are starting to be performed for non-profit groups now as well as the for-profit sector. Due to the fact that the College is predominately provincially funded, there may come a day when an ethics audit is a normal component of the annual audit process for the Provincial Government. It may end up being another service that our extemal auditors do for the College every year. In order for this to occur, the College, by way of the Board of Governors, would need to have a code of ethics/conduct in place so that the external auditors have a framework for the audit. There are normally three (3) types of ethical audits. Starting from the least comprehensive and complex to the most comprehensive and complex are compliance, cultural, and systems audits. Compliance audits just involve the “ethics auditor” determining the level that the organization reaches when comparing the ethics program to the standards, and how well behaviours (both organizational and individual) measure up to the requirements of the ethics program. Cultural audits look at how both internal (employees) and external (other stakeholders) groups feel about the standards and the behaviour of the organization. In a systems audit, the auditor looks at how the ethical principles, guidelines and processes mesh with the organizational systems as a whole. 49If the College does develop a code of ethics, for at least the first year, if not two (2), there should be a compliance audit performed to see how the College is progressing. Then as the various groups ofemployees and other stakeholders get comfortable with the new code, a cultural audit should be done to determine if the climate or culture of the College has fully adopted the code into the everyday culture, not just from a compliance point of view. The Ethics Audit field deals with determining if the organization is actually meeting the commitment of their Code of Ethics/Conduct. The audit could include questions to Board Members regarding activities of the Ethics Committee during the last fiscal year. Did the committee review or update any of the existing policies; were there any new policies added to the existing document? Also, the audit could include interviews with the Ethics Officer/Ombudsman to determine the amount of activity (either hotline or investigations) during the last fiscal year, also determine if there is more activity in one area more than in another (e.g. conflict of interest, fraud, etc.). Other topics could include the annual sign-off for all employees, effectiveness of ethics training/educational programs, and issues being handled in a timely fashion. One question the Board of ‘Governors may need to know the answer is “Do employees (including management) have faith in the systems as they are currently structured?” Do people use the hotline or Ethics Officer/Ombudsman? 50“Ethics audits also include the evaluation of the organization; specific ethics program, st including their code of behavior and the extent to which employees abide by it. ‘Areas that may be reviewed during the ethics audit include many different topics: how decisions are made with respect to the mission, values and goals of the organization and whether these decisions uphold the code of ethics; policies governing items like whistleblowing and other ethically related issues; the track record of the company in handling ethical issues (both public and private); how ethical the leadership appears to be; and the extent of ethics training and development within the organization. Within the College, possible areas that need development include: whistleblower protection, and the dating between employees and students in a post-secondary educational institute. There currently are no policies covering these topics. From the literature review, organizations that are performing ethically are going to continue to operate ethically, with or without a formal code. The world outside the organization has a higher expectation for ethical behaviour. 8.0 Research Ethics Boards In my research of the literature dealing with ethics, there are many Universities and Colleges that have Ethics Guidelines dealing with the ethics of research dealing with * Parsons, PJ. 2004. “The Era of Ethics Audits”. PR Canada: Ethics. http://www preanada.ca/ETHIX/AUDIT.HTM p. 1. 13 May 04 51humans. Universities and Colleges that do research with human subjects need to abide by the Tri-Council Policy Statement: Ethical Conduct for Research Involving Humans. Each University or College needs to have a Research Ethics Board in place that oversees the application of the guidelines and standards. My research paper did not probe into this area of ethics research. 9.0 Conclusion and Recommendations In order the help the College facilitate the process and make the code a living document, the College needs to accept the idea, institutionalise the idea, and then internalise its values, The College must accept the concept of a code of ethics/conduct. The College must make it a part of its day-to-day culture and then it must let others know that this is how the College plans to operate both from a strategic point of view and a managerial point of view. This will also help with recruiting high-level ethical employees. ‘After reviewing the existing codes from other post-secondary educational institutes, the NSCC does need to have a code of ethics. ‘The College is not that far from having its own code. The majority of the work that is needed to write and implement a code has already been done. The mission, vision, and values are complete. There already exists many stand-alone policies that would need to be formally tied to the College values to form a Code of Ethics. There would need to be a committee of stakeholders to review the documents and develop the code. The values of the College would be the framework that would have all policies tied into it to complete the process. 52Recommendations: it 2. Have an Ethics Committee as a subcommittee of the Board of Govemors, Have an Ethics Officer/Ombudsman — who reports to the Ethics Committee or directly to the Board of Governors, Have a structured, consistent, and fair way of dealing with violations of the code, Have a confidential reporting mechanism either — a hotline or a secure website, Have proper training sessions for employees, and, Have a good communication plan. 33Bibliography AICPA. 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