DEVELOPMENT OF

ETHICAL
COMPLIANCE
PROGRAMS
 CODE OF ETHICS
• A formal statement of an organization’s primary values and the ethical
rules it expects its employees to follow
• for reducing the ambiguity
• standards of business conduct that must guide actions of the Board and
Senior management of the company
• Formal document that establishes behavioural expectations for the
company and the high people who work for them
 CODE OF ETHICS
• “CODE OF ETHICS” or “code of practice” or “code of conduct”
• The code of conduct for each company summarises its philosophy of
doing business
• Written code of conduct – mission, values and principles of organisations
• Written code of ethics – benchmarks against which individual and
organizational performance can be measure
• Code - central guide and reference for employees
 NEED OF CODE OF ETHICS
• To define accepted/acceptable behaviour
• Empowers employees to handle ethical dilemmas
• Promote high standards of practice
• A benchmarks for members for self evaluation
• Framework for professional behaviour
• Ethical decisions making in the professional work
 APPLICABILITY
• Applicable to Board Member
• Applicable to all employees in and above officers level
• All employees bound by code
 CONTENT OF CODE
• Company values
• Avoidance of conflict of interest
• Accurate and timely disclosure in reports and documents
• Compliance with laws
• Maintain confidentiality
• Fair dealings
• Standard of business conduct
• Review of code
• Non-waiver of code
• Prohibition of corporate opportunities for personal purposes
 HOW CODE OF ETHICS
• Define its most important guiding values
• Formulate behavioral standards
• Review the existing procedures for guidance and direction
 HIGH-LEVEL MANAGEMENT
OVERSIGHT
• Object of Management oversight – to ensure that management of an
organization or infrastructure is involved in, and clearly committed to, the
delivery of the service and that they fulfil their leadership duties
• Management oversight includes – quality assurance, staff supervision,
dealing with developing areas of concern in individual cases and
facilitating improvements in practice
 DELEGATION OF AUTHORITY

• Assigns responsibility to the subordinate

• Division of authority and powers downwards to the subordinate
• Subdivision and sub-allocation of powers to the subordinates in order to
achieve effective results
• Transfer of authority from a superior to subordinate
 ELEMENTS OF DELEGATION
• Assignment of duties or tasks
• Delegation of authority
• Accountability for performance of duties and exercise of authority
 PRINCIPLES
• Principle of delegation by results : assignment of tasks and the entrustment of
authority should be done keeping in view the results expected
• Principle of Parity of Authority and Responsibility : proper balance b/w
authority and responsibility
• Principle of Unity of command : single supervisor and accountable to him only
• Principle of Absoluteness of Responsibility : Superior is responsible for all acts
of subordinates
• Principle of limitations of authority : limits should be well-defined to avoid
misuse of authority
• Principle of Functional Definition : functions to be performed, methods of
operations and expected results must be defined clearly
• The Scalar Principle :clear line of authority in the organization
• Principle of Exception : give complete freedom to subordinate without
any interference
• Principle of effective control – to measure the performance of
subordinates
• Principle of effective communication : two-way communication is
essential
 ADVANTAGES
• Helps for specialized services
• Motivational factor
• Helps in employee developments
• Helps in prepare them for problem solving process
 DISADVANTAGES
• Lack of authority
• Lack of experience
• Lack of training or skills
 COMPLIANCE PROGRAM
• Compliance means conforming to a rule, such as specification, policy, standard
or law
• Compliance program implies a primary concern with the exercises of rules and
regulations
• COMPLIANCE RISK MANAGEMENT : is the process of managing corporate
compliance to meet regulations within a workable time frame and budget
• Every organizations has a responsibility to identify existing and emerging
legislation relevant to its business and ensure that risks that may arise from the
compliance requirements are well understood by the board and management
 ELEMENTS
• High-level Management oversight : responsibility with governing body
• Written Policies and Procedures : employees must understand the legal obligations
• Training and education
• Effective communication :information about the compliance program must be
widely communicated at all levels of an organization
• Standards enforced through well-publicized disciplinary guidelines
• Monitoring and evaluation
• Detecting offenses and Corrective Action
 PERSONAL VALUES
• Values are ranking or priorities that a person establishes for his norms and
beliefs. They together form his moral standards- helps them to judge
whether an action is right or wrong
• Business is driven by values which determine what business people do
and how others react
 CLASSIFICATION

• Parsons divides personal values into 2

• Terminal values : include freedom and salvation or inner
harmony
• Instrumental values : independence, ambition and obedience
 BUSINESS ETHICS AND VALUES
• Business ethics operates as system of values and is primarily
concerned with the relationship of business goals and
techniques to specifically human ends
• Values helps in preventing unethical practices used by business
owners
• Helps in elimination of abuse of powers