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Implementing and Auditing Ethics Programs

Implementing and Auditing Ethics Programs. Ethical Decision Making for Business 8e Fraedrich/ Ferrell/ Ferrell. CHAPTER 9. Chapter Objectives. To define ethics auditing To identify the benefits and limitations of ethics auditing

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Implementing and Auditing Ethics Programs

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  1. Implementing and Auditing Ethics Programs Ethical Decision Making for Business 8eFraedrich/ Ferrell/ Ferrell CHAPTER 9

  2. Chapter Objectives • To define ethics auditing • To identify the benefits and limitations of ethics auditing • To examine the challenges of measuring nonfinancial performance • To explore the stages of the ethics auditing process • To understand the strategic role that the ethics audit can play

  3. Chapter Outline • The Ethics Audit • Benefits of Ethics Auditing • The Auditing Process • The Strategic Importance of Ethics Auditing

  4. The Ethics Audit Systematic evaluation of an organization’s ethics program and performance to determine whether it is effective

  5. The Social Audit Process of accessing and reporting a business’s performance in fulfilling the economic, legal, ethical, and philanthropicresponsibilities expected by its stakeholders

  6. Benefits of an Ethics Audit Identify potential risks and liabilities and improve legal compliance Can be key in improving organizational performance Improved relationships with stakeholders

  7. Ethical Crisis Management Plans to respond to and recover from disasters that can disrupt operations, destroy organizational reputation and erode shareholder confidence

  8. Measuring Non-financial Performance Non-financial measures of performance are crucial to a firm’s health Measure wholeness and soundness of a company (“return on integrity”) The Sarbanes–Oxley Act Six Sigma Balanced Scorecard The Triple Bottom Line

  9. The Auditing Process Secure top management and board commitment Establish an ethics audit committee Define the scope of the audit Review the organizational mission, goals, and values Collect and analyze relevant information Verify the results through an outside agent Report the findings to Audit committee, managers, and stakeholders

  10. Strategic Importance of Ethics Auditing Should be conducted regularly Provide a benchmark of overall effectiveness of ethics initiatives Can be important in asset allocation and program development Can demonstrate the positive impact of ethical conduct and social responsibility initiatives on the firm’s bottom line

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