Worksheet 2 (term 1) Flashcards
Explain the meaning of the term ethics
Ethics means to know what is right or wrong
It refers to a set of moral principles that are embraced by a community
Discuss ethics in the job/work environment
It’s important for a business to be ethical. All operations, decisions and treatment of their employees and customers must be in a way that doesn’t harm them. Business should have policies which show that they are ethical in: advertising, sales, negotiations and pricing. Employees should know the ethics of the business where they work and they must obey the ethical policies e.g. what the business sells, the safety and liability of the products for sale
Explain how fraud is committed in a business environment
When employees steal: money, goods and time form the business.
When the business: does something in a dishonest/illegal way so that is has an advantage
When suppliers: deliberately charge your business too much for goods ordered
How can fraud be combated?
By implementing fraud prevention policies. These procedures and controls could include:
- know your employees
- put internal controls in place
- screen applicants and make sure business has good hiring procedures
- put code of ethics in place
- financial risk management
Explain financial risk management
It includes: -measuring and managing credit risk -measuring and managing operation risk -market and liquidity risks -managing economic capital ensuring that there is enough capital -managing commodity and energy risk -financial instruments accounting -assessing insurance risk -risk management in transactions -managing and transforming finance and treasury
How can financial risk management help with combating fraud?
It contributes to better decision making and increased performance
Name three things a business should do to be successful
Be ethical, combat fraud, do financial risk management
