Building an Effective Ethics Program

Transcription

1 Building an Effective Ethics Program Monitoring the Ethics Program 2015 Association of Certified Fraud Examiners, Inc.

2 Introduction Post-implementation challenges Conducting an ethics audit Why do ethics programs fail? 2015 Association of Certified Fraud Examiners, Inc. 2 of 24

3 Video Discussion Read the synopsis of Diann Cattani s scenario in your workbook and watch the following video Association of Certified Fraud Examiners, Inc. 3 of 24

4 Video Discussion 2015 Association of Certified Fraud Examiners, Inc. 4 of 24

5 Video Discussion 1. How would you establish an anti-fraud culture at Diann s employer? How would you sustain it? 2. What obstacles do you see in establishing and sustaining an anti-fraud culture at the consulting company? 3. If you were Diann s employer, how could you address her ethical dilemma? 2015 Association of Certified Fraud Examiners, Inc. 5 of 24

6 Post-Implementation Challenges Even if you build a strong new ethics program, you can expect to encounter challenges along the way. Some of these challenges might include: Teaching employees how to identify an ethical dilemma Changing the culture of the organization Addressing ethics across the globe Assessing the program s effectiveness 2015 Association of Certified Fraud Examiners, Inc. 6 of 24

7 Identifying an Ethical Dilemma Making an ethical decision involves identifying red flags of unethical behavior: An ethics policy must be general enough to apply to a multitude of situations and job functions You do not want the policy to be so broad that it is difficult to apply The policy cannot guide employees to a specific response for every possible dilemma; provide examples to make it actionable and effective Association of Certified Fraud Examiners, Inc. 7 of 24

8 Identifying an Ethical Dilemma It is helpful for employees to be aware of warning signs before entering an ethical hazard zone: Discussing these during training can empower employees to make the right choice when an ethical dilemma arises. Michael Josephson came up with ten common rationalizations for unethical acts that can be used during training to help employees navigate ethical dilemmas Association of Certified Fraud Examiners, Inc. 8 of 24

9 Common Rationalizations Beware when someone says, It is ethical if 1. It is legal and permissible 2. It is necessary 3. It is just part of the job 4. It is all for a good cause 5. I am just doing it for you 2015 Association of Certified Fraud Examiners, Inc. 9 of 24

10 Common Rationalizations 6. I am just fighting fire with fire 7. It does not hurt anyone 8. Everyone else is doing it 9. I do not gain personally 10.I have got it coming 2015 Association of Certified Fraud Examiners, Inc. 10 of 24

11 Identifying an Ethical Dilemma 2015 Association of Certified Fraud Examiners, Inc. 11 of 24

12 Changing the Culture An ethics program is greatly influenced by the organization s culture Both formal and informal organizational systems reinforce certain types of behavior 2015 Association of Certified Fraud Examiners, Inc. 12 of 24

13 Changing the Culture Example: A company has an ethics code that forbids employees from receiving gifts from clients. The president is known to have accepted box tickets to a football game from a client. This we say one thing, but do another approach leads to widespread cynicism and undermines the ethics program Association of Certified Fraud Examiners, Inc. 13 of 24

14 Changing the Culture If an organization wants to transform itself into a more ethical culture, all relevant formal and informal organizational systems need to be in alignment. Culture change attempted at lower levels is not likely to be effective unless it is fully supported and modeled by senior management Association of Certified Fraud Examiners, Inc. 14 of 24

15 Changing the Culture Changing organizational culture is more difficult than developing it: In a new organization, workers are open to learning and accepting the culture of their new workplace. Humans have a tendency to want to conserve existing culture. It should be based on the assumption that human beings are essentially good and capable of development and change Association of Certified Fraud Examiners, Inc. 15 of 24

16 Ethics Across the Globe Globalization is becoming a factor in more and more businesses every day. When an organization has stakeholders such as governments, business partners, shareholders, and employees throughout the world, implementing an ethics program presents even greater challenges Association of Certified Fraud Examiners, Inc. 16 of 24

17 Ethics Across the Globe If an organization conducts a significant amount of business with another country, it is important to educate employees about that country s culture Expatriates and employees traveling for routine business need clear guidance that extends to the ethical issues that are likely to arise in their new role because these might contribute to ambiguity and confusion about appropriate behavior 2015 Association of Certified Fraud Examiners, Inc. 17 of 24

18 Ethics Across the Globe Certain ethical standards are universally accepted in all societies. But beyond basic tenets such as thou shall not kill and do unto others as you would have them do unto you, ethics gets more complicated from country to country: Honesty Nepotism Bribery 2015 Association of Certified Fraud Examiners, Inc. 18 of 24

19 Ethics Across the Globe The best way to deal with cross-cultural ethical conflicts is to: Educate employees about the countries the organization does business with Establish clear guidelines in the ethics program for making decisions when such conflicts arise Ensure international vendors and customers understand the organization s ethical standards 2015 Association of Certified Fraud Examiners, Inc. 19 of 24

20 Assess the Effectiveness Many companies make the mistake of creating an ethics program that looks great on paper but does not make a difference in the culture or ethical standards of the company. It is important to: Continually assess the effectiveness of the program Perform ethics audits or incorporate specific procedures to audit the ethics program during routine audit work 2015 Association of Certified Fraud Examiners, Inc. 20 of 24

21 Ethics Audits Review the company s ethical code, ethics training programs, and compliance policies for legal and industry guidelines regarding ethics Make sure that the policy covers the full range of common issues in business See how past ethical breaches were handled Find out what the company has done to prevent future occurrences Conduct private interviews with employees about ethical tone 2015 Association of Certified Fraud Examiners, Inc. 21 of 24

22 Why Do Ethics Programs Fail? Not enforced Effectiveness not monitored Treated as a fad or check-the-box exercise Low priority until crisis hits Leaders don t walk the talk Lack of awareness and visibility Lack of effective training Fear of retaliation Weak controls 2015 Association of Certified Fraud Examiners, Inc. 22 of 24

23 Avoiding the Mistakes Don t leave it collecting dust on the shelf bring it life continually in new and engaging ways Make sure it aligns with your culture and resonates with your employees Do proper due diligence for all employees Be mindful of how reward systems can lead to unethical behaviors Ensure that ownership and accountability is in the C-Suite Create a credible hotline that employees value 2015 Association of Certified Fraud Examiners, Inc. 23 of 24

24 Building an Effective Ethics Program Monitoring the Ethics Program 2015 Association of Certified Fraud Examiners, Inc.