1 How flexible should a companys ethical standards and pract

1.) How flexible should a company’s ethical standards and practices be?

2.) How do you decide which takes priority in a business: ethical standards or financial results?

3.) What is your view of international initiatives to criminalize foreign bribery?

Solution

Answer 1:

Ethics are the moral standards and quality of product and services that socity expects from a coompany. Honesty, integrity and value creation is the basis of ethics. ethical standards are set by the top level of management. Alll emplyees of the concern are expected to follow them with due diligence.

Proper assessment of ethics maintained is possible if there are some codes of conduct. It is a guideline which the employees are expected to follow. A professional can practice if he has genuine licence to do it. This licence is a standard set which will guide him to maintain expected ethical level.

However no hard and fast legal guideline is possible for maintaining ethical standard. All employees should know the value expected from them. Keeping them in mind they should be expected to maintain them. They have enough flexibility in this respect. Any action on their part is acceptable if it does not violate the code of conduct and is good for the concern. If atmoshphere is conjenial and employyees are coooperating in nature then there will be adequate independence and flexinblity in achieving them.

Thus flexibility will depend upon the overall atmoshphere and relations among groups in the concern.

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Answer 2.

Ethical standards are set for different levels of activities. Sometimes they becomes conflicting in nature. As per company guideline, Directors are expected to disclose all contracts related with the company in which they have substantial interest. It is necessary for maitaining ethical standard. Since directors are personally interested in it, a matter of conflict arises.

Same thing may happen between ethical standards and financial results. Basic objectrive of a concern is to maximize net revenue. Management can adopt different ways which can help in reprersenting better financial result. It can sometimes go against the ethical standard..

Suppose a situation of inflation is prevailing in the economy. Management has decided to adopt FIFO method of valuing issues of stores items. In this method, materials purchased first are issued first for production/sale. Note that in inflation, price of end lots are higher than the price of lots purchased at the begining of the year. Thus cost of sales will include items purchased at lowrer rate. It will reduce cost and increase profit. Also endig inventory value will be high as it consists of stock items unsold at higher rate. Thus total current asset value will be high. It will reflect better liquidity and solvency position of the concern.

Now consider the next year. Price is falling now. So company finance department has decided to adopt last in first out (LIFO) method. It will again help to exhibit better picture.

Thus frequent change in issue method, has helped here. It is window dressing of financial statement which is not ethically acceptable.

In a conflicting situation normally ethical standard should prevail on others. It will hep the concern to move in right direction. Remember by violating ethical standard you can make temporary gain. But ultimately you will be the looser in the long run.

In fact there will not be any serious conflict between financial results and ethical standard if the company follows financial standrds and guidelines properly. Accounting standards are established keeping in mind ethical standard. Endig inventories are valued at cost or realizable value whichever is lower. It is based on conservatism approach. This approach stats that subjective items dshould be valued in such a manner that under no circumstances it will increase net revenue which may not be achieved. If you follow this accounting standard guideline in ascertaining financial results, ethical standrs will be automaticaly maintained.

In conclusion it can be said that there is no conflict between financial results and ethical standard. They are complementary to each other.

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Answer 3:

There is a practice to give bribe in a foreign country to fulfill the objective. Suppose country X is operating in country Y to sale its product. In order to increase sale, executives of country X is giving bribe to the purchase executive of country Y. By accepting this bribe, Purchase executive is causing damage to his country. This act of country Y is ethically wrong. It will shaken the confidence of people of both country.

Now initiatives are taken by different countries to consider these acts of giving bribe in a foreign country as criminal offence. So the executive of country X is violating internal code of conduct. He can be arreseted from her own country. This action of treating this bribe offence as criminal in nature is known as international inititaive to crminalization of foreign bribe.

It is whole heartedly acceptable from ethical point of view. If implemented properly thee will be moral booster. All country will be better off and will get releived from corrupt practices. World as a whole will be benefitted from it.