The SarbanesOxley Act of 2002 suggests that businesses devel

The Sarbanes-Oxley Act of 2002 suggests that businesses develop a code of ethics. How effective is a code of ethics in preventing unethical conduct? Review the sample code of ethics of Big Cheese Corporation in Chapter 8. Are there any clauses in this code that you believe need to be more specific

Solution

A code of conduct may be viewed by some as a threatening document that is designed to intimidate rather than promote an ethical culture that benefits the organizational as a whole. Consequently, it is important to keep the language positive and convey these benefits rather than dwelling on the negative implications. For instance, instead of stating that a particular activity is unethical or illegal, it can be pointed out how not engaging in the activity results in a business advantage for the organization, its employees and stakeholders.

Using a consistent format for developing the specific code provisions can be extremely helpful when crafting the document. A sample format can include:
* Identification of the provision or topic, such as conflicts of interest, use of company property, discrimination, etc.
* Definition of the core principle
* Intent of the provision
* Guidelines employees should follow for making a decision when faced with a dilemma
* Example of a typical scenario and how to resolve the matter in accordance with the code

Creating the Code: Six-Step Process

Step One: Gathering Information
Step Two: Creating the Draft
Step Three: Reviewing the Draft
Step 4: Formally Adopting the Code
Step 5: Introducing the Code
Step Six: Enforcing the Code
Conclusion
While developing a code of conduct and taking appropriate steps to ensure proper implementation and enforcement requires time and effort, the process will provide numerous long-term benefits for your organization. From a legal standpoint, a code helps to ensure compliance with the Federal Sentencing Guidelines, Sarbanes-Oxley and other regulations, which can help the organization to avoid costly fines and other punitive measures.
A well-written, user-friendly code can result in the development of a corporate culture built on a foundation of integrity and trust by providing an effective link between the company