Ch 5 Corporate Ethical Governance and Accountability Flashcards Preview

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Flashcards in Ch 5 Corporate Ethical Governance and Accountability Deck (24)
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How could you monitor compliance with a code of conduct in a corporation?

- Ethics audit or internal audit procedures
- Reviews by legal department
- Annual sign-offs by all or some employees
- Employee surveys


What are key elements of a whistleblower system?

1) User-friendly
2) Confidential
3) Anonymous
4) Non-retaliatory
5) Independent


Can an organization guarantee an employee who reports potential wrongdoing that he or she will not actually be retaliated against?



What is the difference b/w ethics and compliance/

- Ethics: list of do's, behaviors we aspire to
- Compliance: list of don'ts, rules we should not break


What are the three most common whistleblower complaints?

1) Corporate disclosures and financials
2) Offering fraud
3) Manipulation


What is the most common reporting channel for whistleblowers?



What is the least common reporting channel for whistleblowers?

A government or regulatory authority


Which of following is an inhibitor for reporting misconduct?

a) Employees don't know about their rights
b) Companies retaliate against whistleblowers
c) Federal government is slow to respond to corruption revealed by whistleblowers
d) Two of the above
e) All of the above

e) All of the above


What is a way that companies are empowering employees to report misconduct?

a) Educating employees about laws that protect them as whistleblowers
b) Creating a work environment where employees feel empowered
c) Designing programs to address misconduct by executives
d) Two of the above
e) All of the above

e) All of the above


How can a corporation integrate ethical behavior into their reward and remuneration schemes?

- Rewards could be offered for outstanding performance, such as for assistance in revealing fraud
- Sanctions should be applied for wrongdoing, including disciplinary interviews, reduction of raises, fines, dismissal
- Annual goals may be employed to provide appropriate basis for positive reward/remuneration


True or false.

In implementing an ethics program, an organization must have clear standards and fair treatment.



Who should have a prominent role in developing an incentive and disciplinary system at an organization?



What is the most important contribution of a corporate code of conduct?

- Guidance to ensure min standards of behavior
- Protect the reputation of person, profession or organization
- So that no one can later say: “No one ever told me…” or “ I thought that’s what top management wanted”


Why should codes focus on principles rather than specified detailed rules?

- Principles are susceptible to interpretation to give guidance to complex or newly emerging issues
- They are far easier to remember and therefore understand and use than an exhaustive, detailed listing of rules
- Few people would read, or could remember what they have read of such a list
- Code should be values based


Are one or more of the fundamental principles found in codes more important the rest?


But all principles included in the code are equally important : honesty, fairness, compassion, integrity, predictability, and responsibility


What are the elements of an ethics and compliance program?

1) Leadership and values
2) Ethics function
3) Risk assessment
4) Code
5) Ethics line
6) Advice and investigations
7) Discipline and incentives
8) Communication and training
9) Continuous improvement


Explain why corporations are legally responsible to shareholders but are strategically responsible to other stakeholders as well.

- According to stakeholder theory, corporations need the support of their stakeholders to reach their strategic objectives


Corporations are now increasingly realizing that they are accountable:
a) Legally to shareholders
b) Legally to all stakeholders
c) Strategically to additional stakeholders
d) a and b
e) a and c

e) a and c


What is the role of a board of directors from an ethical governance standpoint?

- Achievement of corporation's strategic objectives to enhance S/H value
- Maintain the support of the company’s stakeholders to achieve goals
- BOD must build into the company a governance framework such objectives as growth, profitability in ST and LT


Experience has revealed that, to be effective, a code must be reinforced by:

a) Tone at the top
b) Ethics officer and internal auditors
c) A comprehensive ethical culture
d) Principles, rules and examples
e) All of the above

e) All of the above


When does a conflict of interest occur?

- When you owe a duty to someone/some organization, and you put your own interests ahead of the person/organization to whom/which you owe duty
- OR even the appearance of it


This is the preferred approach to deal with conflicts of interests
a) Management
b) Disclosure
c) Remediation
d) Avoidance
e) Awareness

d) Avoidance


What should an employee consider when considering whether to give or receive a gift?

1) Is it nominal or substantial?
2) What is the intended purpose?
3) What are the circumstances?
4) What is the position of sensitivity of recipient?
5) What is the accepted practice?
6) What is the firm/company policy?
7) Is it legal?


How can a company control and manage conflicts of interest?

1) Ensure awareness through codes of conduct, and related initial and ongoing training
2) Create a program and an understanding of employer's concerns regarding conflicts of interest, and major issues