BUSINESS ETHICS:

Critical Steps To Protect Yourself and Your Organization

By

Dr. Richard Mayungbe

Principal Partner,

Richard & Co. Forensic Accountants, Lagos

And

Nigeria Country Representative: Institute of Certified Forensic Accountants, Canada

A paper prepared for presentation at the

 ACFE, ABUJA CHAPTER &

​NNPC FRAUD AWARENESS WEEK

Date: 13-16, November, 2017

INTRODUCTION

In the recent past, local  and global organisations have suffered financial scandals of monumental proportions where corporate assets and personal reputations were woefully plundered. As a consequence of these developments, firms have found themselves pressed to develop new mandates of decorum on business practices and strong codes of ethics to guide the behavior of board members, managers, vendors, customers, employees and a host of other stakeholders.

Wherever people, money, market, product and competition are present, and in the face of a stiff competition, the concern with ethics has always been a big concern. Business leaders today are beginning to think about ethics as a set of principles and guides of behavior. In this sense, business ethics is not only an attempt to set a standard by which all of the employees of a firm can know what is expected, but it is also an attempt to encourage employees, managers, board members and all stakeholders to think about and make decisions through shared set of values.

With increasing urgency, market and social forces are rewriting the roles and responsibilities of business, though the profit motive of business is understood, it should not be accepted as an excuse for ignoring the basic norms, values, and standards of being a good citizen. Modern businesses are expected to be responsible stewards of community resources working toward the growth and success of both their companies and their communities

Markets become free and remain free if their players are responsible and respect the basic values of honesty, reliability, fairness, and self-discipline. The consequences of irresponsible business conduct are inefficient markets and costly government regulation. Free flows of capital, talent, knowledge, and creativity are possible where communities are known for transparency, respect for property, a market-oriented legal framework, and reliable dispute resolution mechanisms. The opposite are a lack of capital, high transaction costs, limited markets, underdevelopment, and poverty.

In short, owners and managers must appreciate the competitive aspects of capitalism with concerned citizenship. They must take individual responsibility for the decisions and activities of their enterprises and the impact on the culture of their enterprise and its stakeholders.

A business needs committed, productive employees, agents, and suppliers to create goods and services. It needs loyal, satisfied customers and consumers to make a profit. It needs people who believe in it and in its prospects enough to invest. It needs to take the long view and to respect the physical environment and the prospects of future generations.

Over the past few decades, governments, international institutions, transnational organizations, organized labor, and civil society have been engaged in an ongoing dialogue into the role of business as responsible stewards. Standards, procedures, and expectations for business are emerging worldwide. Enterprises and markets that are unaware of them, or fail to plan their futures with them in mind, will be unable to participate in the global dialogue and will risk being left behind as the global market economy expands ethics programs to address the legal, ethical, social responsibility, and environmental issues they face. By addressing these issues in a systematic way, enterprises can improve their own business performance, expand opportunities for growth, and contribute to the development of social capital in their markets. They can realize specific business benefits, such as:

• Enhanced reputations and good will

• Reduced risks and costs

• Protection from their own employees and agents

• Stronger competitive positions

• Expanded access to capital, credit, and foreign investment

• Increased profits

• Sustained long-term growth

• International respect for enterprises and emerging markets

Enterprises that excel in these areas create a climate of excellence for their employees, shareholders, and communities, and contribute to the economic wellbeing of their countries

WHAT DO WE MEAN BY BUSINESS ETHICS

Business ethics is simply defined as the set of moral rules that govern how businesses operate, how business decisions are made and how people are treated in the midst of contending interests. Ethics in business is about knowing the difference between right and wrong and choosing to do what is right.

Some business ethics are imposed by law, professional codes, religious beliefs and even morals.  For example, the Securities and Exchange Commission governs the way investment bankers and stock brokers do business. Court rules dealing with lawyers and their client carry some ethical responsibilities.

There are also business decisions that do not fall within the guidelines of the law, in which the businessperson must make their own ethical or moral judgments.

• An example of business ethics is when moral rules are applied by a corporation to determine how best to treat its employees, shareholders and customers.
• An example of business ethics are accounting ethics - especially for accountants of publicly-held corporations - which depend upon complete honesty and transparency. A lack of business ethics allowed the accountants at Arthur Anderson to not behave with honesty, openness and responsible publication when auditing Enron. As a result, shareholders were harmed, the company collapsed, and some Arthur Anderson accountants were held legally liable for their breach of business ethics.
• An example of business ethics are attorney ethics which call for complete confidentiality. The law recognizes that attorneys have such a high moral obligation to keep their clients secrets confidential, that if an attorney violates this ethical duty, he can lose his license to practice law.
• An example of business ethics are medical or medical research ethics which call for protection of their human subjects when it comes to treating patients or conducting experiments on patients.

Our discussion here today is to explore how a business ethics program will help owners, managers, and their stake holders  build an enterprise that protects them from running into loss of assets, loss of reliable staff, loss of reputation, products boycott, loss of market and loss of revenue… These are the critical steps to protect you and your organization. Our discussions shall cover three distinct areas where business ethics create issues on a daily basis:

The Rest of this paper is available on request