ETHICS AUDIT

Jan./Feb. 2007 Conducting an Ethics Audit By Frederic G. Reamer, PhD Social Work Today Vol. 7 No. 1 In recent years, social workers have become more aware of ethical challenges and risks. Contemporary practitioners are familiar with a wide range of ethical issues related to client confidentiality and privacy, informed consent, self-determination, conflicts of interest, dual relationships, termination of services, and impaired professionals. Social work education, continuing education, and staff development now routinely include discussions of ethical dilemmas and ethics risk management. Ethical standards in social work have matured. The profession has moved from relatively brief and simplistic ethical standards to more comprehensive and detailed guides. As a result, social workers are now expected to adhere to ambitious ethical standards set forth in pertinent codes of ethics, licensing, and other statutes and regulations. In light of these increasing demands, social workers should thoroughly examine their ethics-related practices, policies, and procedures to ensure compliance with prevailing standards. One way to assess the adequacy of one’s ethics-related practices, policies, and procedures is to conduct an ethics audit. An ethics audit should focus on what is currently considered to be essential or core ethical issues in social work. Social work’s literature suggests two key knowledge areas that should form the foundation of the audit: (1) ethics-related risks in practice settings, based on empirical trend data gathered from actual ethics complaints (filed with state licensing boards and professional organizations, such as the National Association of Social Workers [NASW]), lawsuits filed against social workers that allege ethics-related negligence, and ethics committee and court findings and dispositions; and (2) current agency policies and procedures for handling ethical issues, dilemmas, and decisions. Based on these sources, social workers should audit their ethics-related policies, practices, and procedures related to a number of key risks: client rights; confidentiality and privacy; informed consent; service delivery; boundary issues and dual relationships; conflicts of interest; documentation; defamation of character; client records; supervision; staff development and training; consultation; client referral; fraud; termination of services and client abandonment; practitioner impairment; evaluation and research; and ethical decision making.* Purpose of an Ethics Audit The primary purpose of an ethics audit is to provide social workers with a practical way to: • Identify pertinent ethical issues in their practice settings. What specific ethical risks do social workers face? Are there ethical issues that arise in the work that are unique to the client population, treatment approach, setting, program design, or staffing pattern? • Review and assess the adequacy of their current practices. Has the practice setting addressed compelling ethical issues? How adequate are the current practices, policies, and procedures? What issues need to be addressed? • Design a practical strategy to modify current practices as needed. What steps does the agency or practice need to take to protect clients, prevent disgruntled parties from filing ethics complaints with state licensing boards and professional organizations, and prevent ethics-related lawsuits? Who in the practice or agency should work to address these issues? What resources will they need? What timetable should they follow? • Monitor the implementation of this quality assurance strategy. How can practitioners ensure that the implementation plan has been implemented effectively? What indicators can staff members use to assess the extent to which the audit goals have been met?

In some settings. and high risk (current practices are seriously flawed. 7. significant modifications are necessary to minimize risk). Data may be gathered from documents (eg. and third parties. 4. and monitor the ethical dimensions of social work practice will. social workers need to take steps to make use of its findings. Once the necessary data are gathered and reviewed. and developing dual-relationship and conflict-of-interest guidelines. PhD. in the final analysis. The committee should also review relevant codes of ethics and federal and state statutes and regulations. and professional ethics. Ideally. The committee should document the complete audit process to demonstrate its good-faith effort to assess ethics-related policies and procedures. healthcare. is a professor in the graduate program of the School of Social Work. He is the author of many books and articles. minimal risk (current practices are reasonably adequate. Policies may be codified in formal agency documents or memoranda. The concept of an ethics audit is consistent with social work’s enduring efforts to protect clients and others from harm. the committee may focus on specific ethical issues that are especially important in those settings. confidentiality guidelines. the audit committee should assess the risk level associated with each issue. In agency settings. Procedures entail social workers’ actual handling of ethical issues in their relationships with clients. Independent practitioners may want to consult with knowledgeable colleagues or a peer consultation group. 3. the chair would have obtained formal education or training related to professional ethics. In other agencies. — Frederic G. 6. modifications are necessary to minimize risk). Examples include updating confidentiality policies to reflect current laws and code of ethics standards. 2. Each topic should be assigned one of four risk categories: no risk (current practices are acceptable). criminal justice. practices. address. client rights statements) and interviews conducted with agency staff that address specific ethical issues. and his research has addressed mental health. colleagues. revising informed consent procedures and forms.and minimal-risk issues. The action plans should spell out specific measures that need to be taken to address the identified problem areas. the committee may decide to conduct a comprehensive ethics audit. strengthen the profession’s integrity. Social workers should develop an action plan for each risk area that warrants attention. Each issue should be assessed with respect to relevant agency policies and the procedures staffers follow. This documentation may be helpful in the event that someone raises questions about the adequacy of the agency’s ethics-related practices. available through NASW Press. Rhode Island College. a staff member should assume the role of chair of the ethics audit committee. The audit committee should identify specific ethics-related issues on which to focus. moderate risk (current practices are problematic. Once an ethics audit has been completed. The social work ethics audit is a process designed to help social workers assess ethical issues systematically and comprehensively. 5. and procedures. informed consent forms. then moving on to moderate. The maturation of ethical standards in social work has accelerated the need for social workers to examine more closely the ethical dimensions of their practice. * For a more detailed discussion of ethics audits in social work. The committee should identify which staff will be responsible for the various tasks and establish a timetable for completion of each and a mechanism to follow up on each task to ensure its completion and monitor its implementation. Such systematic attempts to highlight. . Members should be appointed to the committee based on their demonstrated interest in the agency’s ethics-related policies. beginning with high-risk issues. The ethics audit committee should decide what kind of information it will need to conduct the audit. minor modifications would be useful). Reamer.Steps in an Ethics Audit Conducting an ethics audit involves several key steps: 1. see The Social Work Ethics Audit: A Risk Management Tool by Reamer.

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Ethical auditing is a process which measures the internal and external consistency of an organisation's values base. however. Many ethical problems for multinationals and companies trading far from their home base arise because of differing value systems: ethical audit will enable a company to establish clear guidelines about the limits of acceptable behaviour which are consistent world-wide. to ensure that the values base is one which is shared by.both proclaimed and actual . and because it is likely to bring business benefits. Nijenrode University. 1. Economics and Ethics HOW ETHICAL AUDITING CAN HELP COMPANIES COMPETE MORE EFFECTIVELY AT AN INTERNATIONAL LEVEL Sheena Carmichael. There is nothing new about ethical behaviour in business. The Netherlands Email: scarmich@nijenrode. Ethical audit determines the internal and external consistency of a company's values base. and enable it to put in place a robust structure to support the operationalisation of the values. The results provide important management information. The reasons for examining the state of a company's ethics are many and various. More often. Nijenrode University Straatweg 25. It begins internally. In the United States. Ethical Audit Ethical audit is a new technology which is being developed at the European Institute for Business Ethics (EIBE). or at the least acceptable to. companies choose to do it simply because it is right. and identifying a baseline to measure future improvements. Its objectives are . processes and people. In some cases. and can (and ideally should) be used to report on the company's social and ethical performance. and that it incorporates a stakeholder approach. in recent years many companies have appointed a senior manager with dedicated responsibility for promoting ethical behaviour throughout the company. either as part of the Annual Report or as a supplementary report. companies are driven to it by a gross failure in ethics. risk management. such appointments are the exception rather than the rule. Identifying organisational values . of Europe's major companies now have an ethical code or code of conduct. Harry Hummels. They include external societal pressures. in particular. while recognising where appropriate local societal differences. with a review of paper.nl Abstract Ethical Audit International Business Consumer Power Conseptual Framework Stakeholder Perspective Comprehensive and Integral Conclusion Abstract Actions are dictated by values. Henk van Luijk European Institute for Business Ethics. perhaps a majority. The key points are that it is value-linked.http://actrav.itcilo. but many.org/actrav-english/telearn/global/ilo/code/audit. stakeholder obligations. it is important. Arco ten Klooster. the Netherlands Business School. NL 36 21BG Breukelen.htm International Society of Business. all its key stakeholders. which may have resulted in costly legal action or stricter government regulation. The findings of the audit are then tested out with stakeholder groups. In Europe. nor about programmes designed to improve and perhaps formalise an ethical approach to decision making within companies.will assist a company to ensure that all its actions are commensurate with these values.

A 1995 poll of 30.identify specific problem areas within the company .clarify the actual values to which the company operates . for many years. Consumer power Consumer power is increasingly being wielded to affect company behaviour. because they are not prepared to work within that regime.how to do business in countries where backhanders are expected in the common course of events. particularly related to lack of openness 2. if it wants the findings of its ethical audit to be comprehensive and provide the greatest payback in terms of identifying potential areas of vulnerability to consumer pressure. and that these values should be consistent wherever they operate. An ethical profile brings together all of the factors which affect a company's reputation. because they would not cooperage with apartheid. perhaps. it can: . Some companies make a principled withdrawal from countries where they could otherwise manufacture profitably.which forbids US companies to engage in this when dealing with the public sector in other countries. more than any other. Many of the decisions they have to take have no ideally right or ideally good answer. Some companies withdrew from South Africa. and Shell were forced to change their plans for disposal of the Brent Spar oil platform when German consumers stopped buying Shell petrol. By taking a picture of the value system at a given point in time.identify general areas of vulnerability.provide a baseline by which to measure future improvement .000 consumers in the UK showed that one in three had boycotted stores or products in .give stakeholders the opportunity to clarify their expectations of the company's behaviour . is an area where executives might like to set themselves the publicity test . This. Companies recognise the importance of their financial profile for their investors. The boycott mechanism has long been a way of protesting politically. But now boycotts are called to protest against specific company actions: Nestle's sales suffered from the boycott protesting about their policy on selling baby milk in the third world. Protest from outraged consumers may force companies manufacturing in India or Thailand to sack the underage children they were previously employing as machinists but what if the 12 and 13 year old girls are then forced into prostitution to survive? Companies alone cannot right all the evils of society. International business Multinational companies face special issues in relation to ethical auditing. Executives of such companies are well aware of the added complications which operating across a number of cultures brings.two-fold: It is intended for accountability and transparency towards stakeholders and it is intended for internal control. 3. by examining the way in which it does business. though. of their service profile for their customers. and of their profile as an employer for their current and potential employees. But problems tend to multiply when differing value bases are permitted to take hold within different cultures. as Levi Strauss did in China. a significant number of consumers avoided buying South African produce. It may have seemed acceptable for Shell to apply differing environmental standards to their drilling in Ogoniland decades ago to those they applied in Europe or North America . others believed that they could set an example and give opportunities to black people they would not otherwise have had.learn how to meet any societal expectations which are not currently being met . The United States has brought in legislation the Foreign Corrupt Practices Act . precisely these special issues which can make ethical auditing so valuable to multinationals. It is.but in an era of acute global consciousness of the interdependence of the world eco-system the same standards are rightly expected in every continent.learn about the issues which motivate employees . One of the issues which most concerns multinationals is that of corruption . to meet the ethical objectives of the organisation.how would I feel if my behaviour were headlined in my city's local newspaper? How would I feel if my family knew about it? Working practices and human rights are other major areas of concern. What matters is that they should have a clearly thought out framework of values. A multinational company must test its values across all its areas of operation. The value of the ethical audit is that it enables the company to see itself through a variety of lenses: it captures the company's ethical profile.

relationships with employees. aligning workforce values is important. Therefore. On the one hand the audit is intended for accountability and transparency towards stakeholders. Where in the past unethical behaviour by a company might have been kept quiet by skilled public relations people. although it is no easy task to determine what the prevailing values in a company are and/or what they should be. 4. and concern for the public good being greater) and that the pressure group will succeed in generating significant publicity about the incident. Each company may have other groups of people whom it considers to be key stakeholders . This requires openness about values and consistency between them. Their reliability is crucial. with customers. Since someone's values form the basis of his or her ethical behaviour. the values that a company wants to incorporate must be made explicit. the ethical audit from the outset is value-linked. All relationships are based on values such as trust and an expectation of fair dealing . The conceptual framework In contrast to social auditing which aims primarily at measuring the social impact of a company on its environment. on the other hand the audit is intended for internal control in order to meet the ethical objectives of the organisation. to some extent.for example. The picture which develops here is of a company at the centre of a network of relationships . Almost two in three of those surveyed were more concerned about ethical issues now than five years ago. Their timely delivery is crucial. (thus current legal standards would represent a minimum basis for accountability). The rights to information are determined by (a) the social environment within which the relationship between the organisation and the stakeholder is set. The quality of components or raw materials used is crucial. Ethical auditing enables companies to better comprehend these relationships. Furthermore. if a company wants to behave ethically across the board.the past because of concerns about ethical standards. meaning that organisational values are to be found within the company at all levels in stead of being inculcated from outside or by senior management alone. It measures the "ethical climate" of a company by analysing the values on which the organisational actions are based and by testing the moral quality of these actions against values that should be taken into consideration. In this sense. the ethical audit is organisation-centred. suppliers become key stakeholders. justice and responsibility and can. and in turn gives the company the opportunity to encourage such groups to participate in the decision making process. and six in ten were prepared to boycott in the future. or at the very least to inform them fully of the company's position. in order to have confidence in what future actions the organisation will take. In part these values are connected with public opinion on matters such as respect.understanding these dynamics and finding out where expectations and perceptions differ give a company a head start on maintaining strong and stable relationships. while still others may have strong links with pressure groups and voluntary organisations. but the bottomline is that the organisation must formulate its own set of basic values. stakeholders need to know the values that a company has committed itself to. Accountability requires that stakeholders are provided with such information as they have a right to. there is now greater likelihood that someone within a company will alert the relevant pressure group (loyalty to employers being lessened. . with society at large. In the move to total quality. Pressure groups are growing more professional and more vociferous. The best suppliers want to develop long term relationships with customers whom they can trust to deal fairly with them and to pay on time.One of the aims of the ethical audit is to give a company the opportunity to track progress through the years and to find out where there is still some work to do with regard to the company's ethical objectives. Stakeholder perspective The objectives of the ethical audit are two-fold. with shareholders. be derived from the rights and interests of stakeholders. One of the greatest benefits of the ethical audit is that it assists the company to scan the environment to identify the issues which are most likely to provoke action by pressure groups. if a company wants to establish relationships with its stakeholders based on trust. 5. a company with particular environmental concerns may consider future generations to be key stakeholders: other companies may see their retired employees as being important.

Furthermore. This process is most likely to include "hard" information. By collecting this kind of information a company is in fact keeping some records on the social impact of its actions and policies and therefore we might consider this social accounting. It is obvious that more important stakeholders will have greater influence on the company's actions and that in the case of conflicting concerns the interests of the stakeholder group with the most influence will prevail. A comprehensive check-list (with regard to lines of communication. surveys. This might be the case as a result of an earlier participative process (written down in a values statement or not). chain of command. etc. We use the term 'ethical accounting' to refer to the process in which data is gathered with regard to the organisational values. the environment. Secondly stakeholder concerns will differ between groups.g. So. it also looks at what the organisational values should be. these norms . The outcomes are then related to the value system of the company. a second moral opinion will be developed on the documentation in the organisation. Thus. looking at the people in the organisation is essential for laying bare organisational values. Therefore. on the company's conception of relevant stakeholders and on the social responsibility the company is willing to take for justifying its actions towards a particular stakeholder-group. Value-linked corporate behaviour derived from bookkeeping records.plus (b) the organisation's own decisions about which stakeholders it particularly wishes to recognise and emphasise. reward systems. but it is important that this is an on-going process in order to make sure that the company perseveres with these values. as well as conflicting interests within the organisation and values that are inconsistent with each other. questionnaires etc. The fact that the number of stakeholder-groups taken into consideration is limited. This also applies to value-linked processes in the company. hiring/firing policies. using organisational development theories to underpin the findings. which is relevant for stakeholders. Dialogue with stakeholders is carried out in the external ethical assessment process and in this process the interests of stakeholders are identified and balanced according to the weight the company assigns to each stakeholder group. business accidents or fines for unethical behaviour. etc. etc. in order to lay bare the (explicit and implicit) value-system of the company through analysis. etc. will be tested against current guidelines and opinions on environmental issues. indicates that certain stakeholders are perceived as being more important than others. because the extent to which a company is accountable to stakeholders depends on the particular social environment of the company. customers.being the values the company wants to incorporate . because not all stakeholders are actually involved in the auditing process. if there are any.) is used to determine what behaviour the company values. although one could think of many more groups that could be of importance to a specific organisation. meaning that the "paper" will be reviewed to make values explicit. An ethical bookkeeping system collects data systematically about the organisation's ethical behaviour. internal ethical assessment is also concerned . A significant quantity of this data will already be present in the organisation's "normal" accounting and management information systems (e. This is done by looking at the formal and informal structures and processes in the organisation.must be clear. employee relations. Since the purpose of internal auditing is to measure the compliance of facts with norms. It is possible and justified to assign different weights to the interests of different stakeholder groups. Since corporate ethical behaviour depends on the ethical behaviour of individuals. For most companies the external stakeholders which are included will be restricted to the minimum of: shareholders. The objective of accountability towards stakeholders requires information about general issues such as product safety. suppliers and the wider community. revealed by the accounting process. But internal ethical assessment is not only concerned with uncovering prevailing values. human resources information: number and level of female employees. Firstly this is evident. to test their consistency and to find moral gaps. including for instance complaints of stakeholders. By doing this the ethics gap (different perceptions on the company's ethics) is identified.). This will include looking at the information provided by the bookkeeping system and looking at the paper and ethics-related processes in the organisation. In the internal ethical assessment process the prevailing values of employees are examined through interviews. stakeholder groups do not have an absolute claim on businesses to provide them with information. payment ratios for employees of different ethnic origin. stakeholders' right to information is in a large measure related to a positive duty that the company has committed itself to.

backed up with information provided by the bookkeeping system. internal and external ethical assessment. where necessary. We believe that ethical audit will have particular benefits for multinational companies. The latter especially finds expression in the ethical assessment process. in the sense of condemning a company for moral failure. This is done in the external ethical assessment process in which the organisational set of values is tested against the opinions of relevant stakeholders. but it is not intended to be judgmental. if moral failings become apparent. Hence. As a result the company as a whole will be able to set goals for further improvement in ethical behaviour. By using focus groups. but they ought to give a clear picture of both values and vulnerabilities. It is particularly critical that values are checked for economic viability as well. These were undertaken by outsiders critical of company behaviour. Comprehensive and integral It is important to note that ethical auditing is a comprehensive and integral approach: integral. The assumption which EIBE would make is that any company which commissioned an ethical audit is concerned about its moral standing and therefore intends to take action. In this respect. as well as about the underlying values of the company's actions. Obviously it reaches a judgement. It is essential that the social mission and the economic mission of a company go hand in hand. which automatically sets the audit results in a wider context. So. In the case of a first audit. making the company fraud resistant. . a company should be able to track its progress based upon the baseline information provided by the different elements of the ethical audit. and in a general direction as to how the company wants to develop its value system on the other. especially ones which involve partners from different countries where there may be conflicting value systems. This is a stance which is praiseworthy and should be supported: the report's findings will give the company the knowledge necessary to take appropriate action. but at the same time ethical bookkeeping. of the company's ethics. the EIBE ethical audit is very far removed from the original social audits which were carried out on companies in the 1960s. simply because this is the right thing to do. because it combines different approaches with different methodologies and comprehensive. The findings will therefore need to be translated into action planning for the following year. taking various fields of interest into consideration. If the ethical audit is performed every year or every other year. Since accountability is one of the objectives of the ethical audit. Workshops and small group discussions will further raise ethical awareness and can be an important tool for building consensus. who were seeking ammunition to bring external pressure on the company to change. the ethical audit will result in the identification of (actual) organisational values on the one hand. but it could also be of great value in take-over and merger situations. stakeholders can then provide important feedback. and improving staff morale and motivation. The fact that values and policies are discussed will make sure that they are looked at from different angles. a view at a particular point in time. 6. Conclusion The findings of the audit give a snapshot. external validation and the resulting action planning can influence organisational values and thus corporate ethical behaviour. because it takes the entire organisation (including its environment) into consideration with all the different perspectives that prevail in different functional areas. because ethical policies which are not based upon solid business economic grounds will not endure very long.with internal audits. This is done by listening to employees (the original meaning of the word audit being derived from the Latin word Audire = to listen). 7. Feedback is absolutely necessary for a company that wants to promote organisational learning and the results of the ethical audit exercise (including the findings from the internal audits) should also be reported to all employees. they will necessarily be of less value for comparison purposes than would future audits. Focus group discussions should be about general issues. ethical accounting. to balance social and ethical aspirations. the ethical audit provides a snapshot of the ethical behaviour of a company. An audit report is a factual document.Other benefits include enhanced corporate reputation. the results of the process which are relevant for stakeholders should be disclosed to them.

The technology of ethical auditing is still in its infancy.nd. This paper is online: http://www. The full payback is not yet known. Our experiences have convinced us that this is one of the most exciting developments in management in decades . plus benefits about which we have been told by colleagues elsewhere. The benefits listed here derive from a number of experiences of consultancy work by members of the European Institute for Business Ethics.htm .and that it is not simply another fad.edu/~isbee/papers. and focusing on values will enable management to create an organisation which is excellent in every possible sense. Values are the basis of all organisational behaviour.

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