Ethical aspects

Ethics is concerned with what is good for individuals and society and is also described as moral philosophy. The term is derived from the Greek word ethos which can mean custom, habit, character or disposition. Ethics covers the following dilemmas: how to live a good life our rights and responsibilities the language of right and wrong moral decisions - what is good and bad?

 Business ethics (also corporate ethics) is a form of applied ethics or professional ethics that examines ethical principles and moral or ethical problems that arise in a business environment. It applies to all aspects of business conduct and is relevant to the conduct of individuals and entire organizations.

 Ethical management can be defined as a transparent approach to business success based on the nations priorities and societys moral guidelines The most professional, transparent, law abiding management practices Financial manager encounter day to day decisions that have important ethical dimensions.

 Financial manager should Ensure that personal interest do not conflict with business decisions Respect the confidentiality of information entrusted Make decisions based on rational objective business analysis rather than on inappropriate factors, such as race, sex or religion To act fairly in dealing with customers while protecting the legitimate interest of the business

Ethical dilemma
An ethical individual or organisation being forced to accept an unethical or semi ethical solution to a problem in the larger interest of the organisation, employees and society E.g. recording the value of obsolete items at their book value to show higher assets Ethical dilemma have different shades and colours, depending on its size and connectivity with the business variables While facing the dilemma he must consider the order of preference

1. 2. 3. 4. 5. 6. 7. 8.

The universe Nation Society Organisation Division Group Family Himself

Adequate ethical solutions

Combination of solutions Fully ethical and fully legal Fully ethical but not so legal Fully legal but not so ethical Unethical and legal Quality of such solutions Best Ethically accepted Not acceptable in larger interest Diastrous

 Ethical economical combinations i. Fully ethical and most economical Best ii. Fully ethical and not so economical acceptable iii. Most economical and not ethical dangerous iv. Non-ethical and non-economical - diastrous

A/c disclosures for ethical financial mgmt

The visibility of the ethical approach to FM is seen in the BS Ethical A/C disclosures must provide info about the following core aspects of : 1. All transactions as per broad mission, minute details of the policy 2. Volume, nature, time, place, of the transaction as per best standards 3. A /c std comparable to best in the world 4. Impact/result of transaction is very close to the ethical expectation 5. Transaction is done by the appropriate person within his powers with ethical background

Control system supporting ethical programs

1. Security measuresCC tvs, tapping calls, viewing mails, 2. Design systems to regulate ethical conduct 3. appoint ethics officers/ consultants 4. Establish standards, training, reports 5. Rewards & punishment schemes crucial role in ethics compliance 6. Coordination & integrationreporting of violationswhistle blower protection

Reasons for unethical financial management

Ambition of achieving high results with inadequate resource ant time Coercive and corrupt practices followed Structural and procedural deficiencies in the organization Inefficient internal control system Unhealthy rivalry promoted by the owners Growth at any cost An individuals family background

Adv of ethical FM
1. 2. 3. 4. 5. 6. Consumer confidence Lower cost of promos, better prices Better employees lower cost Investor confidence Lower cost of funds --equity, debt Credit from supplierslonger, better rates, quality, investment by supplier

7. Partnerships, tie-ups easy 8. Dealing with government easy 9. No need of parallel accounting 10.Corporate governance improved