CHAPTER 9

Implementing and Auditing

Ethics Programs
 The Ethics Audit
• Systematic evaluation of an
organization’s ethics program and
performance to determine whether
it is effective
– Regular, complete, and
documented measurements of
compliance with policies and
procedures
– Can be a precursor to
establishing an ethics program
– Helps to identify the firm’s
current ethical standards,
policies, and risk areas

Source: Digital Vision

 The Social Audit

• Process of accessing and reporting a business’s

performance in fulfilling the economic, legal,
ethical, and philanthropic responsibilities
expected by its stakeholders
– Broader in scope than an ethics audit
– An ethics audit might be a component of a
social audit
 Benefits of an Ethics Audit

• Identify potential risks and liabilities and improve

legal compliance
• Can be key in improving organizational
performance
• Improved relationships with stakeholders
– Pressure to account for actions in areas
including corporate governance, ethics
programs, customer relationships, employee
relations, environmental policies, and community
involvement
Top Business Issues Over the Next
Five Years
 Ethical Crisis Management

• Plans to respond to and recover from disasters that

can disrupt operations, destroy organizational
reputation and erode shareholder confidence
– Involves contingency planning, assessing
organizational risks, planning for potential
occurrences and providing tools to respond
 Crisis Management and Recovery
• U.S. companies are failing to identify and manage
ethical, social, economic, and environmental
concerns
• Anticipation of
problems and
intervention can
stave off
organizational
disaster

Source: Triangle Images

 Risks in Ethics Auditing

• Ethics audits may uncover ethical problems that a

company cannot remedy
• Stakeholders may be dissatisfied with the information
• Conducting the audits is a financial and record
keeping burden
• No guarantee that auditing is the solution to ethics
concerns
 The Auditing Process
• Secure top management and board commitment
• Establish an ethics audit committee
• Define the scope of the audit
• Review the organizational mission, goals, and values
• Collect and analyze relevant information
• Verify the results through an outside agent
• Report the findings to
– Audit committee, managers, and stakeholders
 Strategic Importance of Ethics
Auditing
• Should be conducted regularly
• Provide a benchmark of overall effectiveness of
ethics initiatives
– Can be important in asset allocation and program
development
• Can demonstrate the positive impact of ethical
conduct and social responsibility initiatives on the
firm’s bottom line ( 盈虧 )