Accounting Ethics and Corporate Governance - Assignment Example

Accounting Ethics and Corporate Governance Student’s Name: Instructor: Subject: Date: PART A. 1. What is business ethics Ferrell et al (2011) refers to business ethics as the determination of the characteristics and in depth overview of morality (which in this context is used to refer to the ‘moral judgments, standards and rules of conduct’ (p7). In the same regard, Golja and Paulistica (2010) argue that business ethics deals with moral issues. Although they seem to concur with Ferrel e al (2011), the authors argues further that moral and ethics are significantly different. First moral are either used descriptively while referring to one’s code of conduct as influenced by religion, society or his/her own behavior on the other hand, ethics are said to refer to well-founded principles that determines right or wrong and thus prescribes how someone is supposed to behave or do something. This is usually in terms of fairness specific virtues, obligations, right and benefits to the society (velasquez et al, 2010). In the business perspective, ‘business ethics’ refers to complying and/or observing the standards and principles that determine the manner in which a business should be conducted from a moral point of view (Golja & Paulistic, 2010). Besides each business enterprise is founded on thrust and thus moral in one way moral standards are the obligation of the business enterprise (Ibid, 2010) 2. Isn’t business ethics simply a function of personal ethics? What role can the organization play in adopting sound business ethics? As aforementioned in question one, ‘business ethics’ encompasses both the moral and ethics of an individual as influenced by the cultural and societal perspectives. In this depicted in his/her business ethics. Conversely, business ethics fits in well in every aspect of business conducts and thus it is important to the conduct of individuals in particular and the business organization/ enterprise in general. An organization can observe business ethics while carrying out its business activities resulting in definition of its ethical program, adoption of code of ethics, organizing ethics training for its employees, monitoring and reporting on the progress (Golja & paulistic, 2010). Similarly, De Geoge (2010) argues that an organization can build business ethics into its structures in various forms for instance ethical codes ethics officers, and ethics committees. Besides the cooperation management and board member must be role models to their juniors/employees with respect to their code of conduct (Golja & Paulistic 2010). 3. What is an ethical issue and how does it differ to can ethical dilemma? Ethical issue concerns an aspect of moral standards i.e. whether sometimes is right or wrong, goal or bad. This would involve Applying moral judgments as influenced by societal and cultural perspectives in determining the good or bad of something. On the other hand, ethical dilemma concurs being in the real situation where one’s judgment would result in him/her being held accountable for the decisions make. Generally, ethical dilemma entails the decision making process which is not an easy task to everyone i.e. a person finds him or herself in a difficult situation to make a choice between right and wrong. In other words called ethical dilemma (Golja & Paulistic, 2010) 4. What is a foreseeable ethical issue for Nine Carat Limited? Explain why this is considered an ethical issue. One of the ethical concerns is the conflict of interest demonstrated by the company officials in cooperation with brokers. This results in corruption and thus financial loss and high operating costs to Nine Corat Ltd. On the other hand, the project Finalization and Replenishment Managers are not complying with environment protection Authority. This would result in pollution of environment (i.e. land and its physical features) which would endanger the lives of people in the society. This would be a major ethical issue in the near future. 5. What is a foreseeable ethical dilemma for Nine Carat Limited? Explain why this is considered an ethical dilemma. As provided in the case study details, the management of Nine Carat Limited established an ethical committed after receiving a lot of criticism from various stakeholders. The establishment of the Ethics Committee is in the anticipation that it would deal with critics. In that case, the Ethical committee would have to make decisions based on ethics committee would be faced by dilemma as to whether act to the best interest of the company, the general public or stakeholders or according to their own moral judgments (skouloudis et al 2011) 6. Use figure 2.3 on p. 39 of the text by Ferrell, Fraedrich and Ferrell (2011) to outline the four steps that nine Carat Ltd should take to become socially responsible. For Carat Ltd to become socially responsible, it must take following steps. First it has to carry out its business activities within the establishment legal structure/policies. As such it has to comply with the environmental policies laid out by the Environmental Protection Authority. Besides, the officers of the company who are involved in land acquisition must comply with procurement procedures or financial auditing policies so as to avoid conflict of interest. Secondly all the business projects that are chosen by the company’s management must be aimed at maximizing the wealth of its shareholders. Such undertaking includes the expansion of its asset base and increased revenue generation through extraction of more gold. This would result in high dividends or capital base of the company. Failure to comply with environment policies that are aimed at protecting environment would result in higher operation costs in legal bathers and thus financial loss to shareholders. Thirdly, the management of Carat Limited should entertain the criticism they receive from various interest groups so as correct all what they are doing wrong. Such decision and corrective action needs to base on moral judgment as dictated by societal and cultural values in the company’s neighborhood. Finally, Carat Limited should Institute a corporate social Responsibility that is aimed at giving back to the society part of the proceeds it generates. Reason being, it is within that community that they are utilizing its land to extract gold. The gold is part of natural resources of the community is by initiating education scholarship programs, building health centers and provision of piped water. This is what is referred to as being philanthropic (Ferrel et al, 2011). 7. How will investing valuable resources into formulating a code of business ethics and thereby achieving social responsibility likely to support the bottom line? Formulating a code of ethics would result in establishment of an ethical culture and climate (Golja & Paulistic, 2010) Ethical culture depicts to what extend the organization regards its business values. On the other hand, ethical climate would expound on the company’s (collective personality) with special emphasis on decision making process, perceptions and ethics based attitudes of the organization. This accompany is expected to be accountable to various stakeholders as well as the surrounding environment. Therefore, collective responsibility entails collective action although it’s the responsibility of the management to organize and manage the processes in such a way that employers would be in a position to see beyond their actions and this contributes towards collective responsibility. PART B. 1. Identify broadcasting corporation’s primary and secondary stakeholders. Explain why you have classified them in this way? The company’s customers (children aged 5to 12), teenagers aged 13to 19 and male adults who makes up to 75% of the market) and its 500 employees are the primary stakeholders. Reason being they have their own preferences and thus influence why the company manufacturers so as for them to buy. This translates into making the profit by the company. Their association with the broadcasting corporation is vital for the company’s survival. Secondary stakeholders in this case are for instance government agencies and the community around. Although they do not directly relate with broadcasting, they have a stake in that they have to ensure their broadcasting business activities are ethical for the overall benefit of the community. For instance the use of nudity features in the video game would threaten the ethics and morals of the society especially children. Therefore the government and other interested groups would be concerned. 2. What is the role of stakeholders in business ethics? Provide2 two examples of the role of the stakeholders might have in the broadcasting corporations. Stakeholders have the duty of ensuring that business activities conform to societal and cultural values in all aspects. In one case where stakeholders for instance government agencies have a role in regulating the use of nude pictures in video games among children. Secondly the inclusion of gambling techniques or practices in video game is highly regulated by government agencies. 3. Discuss the unethical behavior in the case using the four factors of the ethical decision making framework in the figure 5.1 on pg 12 of the textbook. Assume also, that broadcasting corporation will develop and distribute the new game “lucky” as advised by the president. One of the factors that this case can be subjected to is the ethical issue intensity. The president of broadcasting corporation and the product manager out to chosen between various alternatives and avoid the use of nudity in the “lucky” video game .They were supposed to consider their own believes and moral judgments with respect to societal and cultural values of the general public. For instance, Kent is said to have perceived that the issue at hand (using nudity pictures) was unethical and this influenced his decision making progress. Secondly, individual matters in this are depicted at the point when Kent seeks opinion from his close family regarding “lucky” game. it is through socialization that Kent made up his mind that the game is not worthy. Kent demonstrates a high level of integrity and moral judgment as opposed to his father. This is the organizational factors encompasses bringing together individuals own perspectives with that of others so as to come out with the best alternative. In the case of “lucky” video game Kent as well as the president of broadcasting corporation seems to consider an alternative reducing the amount of violence in the game so as to top the Mexican market. Finally, in regard to opportunity, the immediate job context where Kent works, in coordination with the company’s president, influences Kent’s behavior. The president of the company is convinced by Kent that “lucky” project is not the best idea and as such Kent is given moral responsibility of working on internet best market products. PART C 2. Differentiate between agency theory and stakeholder theory as discussed in the reading by psaros (2009). Provide evidence of the application of each of these theories in the Asx corporate Governance principles and recommendations. It is dependent on an individual and the context of application in evaluating the differences between stakeholder and agency theories with respect to corporate governance. Person (2009) argues that agency theory is based on the traditional financial perspectives in which case individuals are regarded as to be utility maximizers. In corporation stakeholders theories is largely entrenched on morals as well as founded on a social responsibility. In other words, whereas individuals have own objectives and they aim at achieving them, they are influenced by their open moral judgments. Both the theories touches on risk assessment, optimizing company performance, creating value, and providing accountability. Therefore they fall with asx corporate governance principles and recommendations (asx corporate governance council, 2007) 1. Use context database (available at CQUniversity library website) to access the annual reports of one company. Outline the main recommendations of principles 1, 4 and 6 of the asx corporate governance principles and recommendations and discuss the extent or otherwise, your chosen company has complied with the principles .Include examples or quotes from the report to support your discussion. − Principle 1 of asx emphasizes on establishment and disclosure of roles and responsibilities of both board and management of the company.Austrialian Biodiesel group ltd inn its 2010 annual report has outlined the process of assessing the managements performance. Principle of asx emphasizes on importance of safeguarding and upholding integrity and financial reporting. In the a2010 annual report of Austrian Biodiesel Group ltd the company stipulates the membership and the functions of the audit committee. Finally principle 6 of Asx emphasizes on the protection of the shareholders right. As such as effective communication between the company and the shareholders is paramount through annual reports and other publications. References ASX Corporate Governance Council. (2007). Corporate Governance Principles and Recommendations, 2nd edn, Retrieved April 18, 2011 from, http://asx.ice4.interactiveinvestor.com.au/ASX0701/Corporate%20Governance%20Principles/EN/body.aspx?z=1&p=-1&v=1&uid= De George, R.T. (2010.) A History of Business Ethics, Retrieved April 18, 2011 from http://www.scu.edu/ethics/practicing/focusareas/business/conference/presentations/business-ethics-history.html Ferrell, OC, Fraedrich, J & Ferrell, L (2011). Business ethics: ethical decision making and cases, 8th edn. USA: South-Western Cengage Learning. Golja, T. & Paulisic, M. (2010). Corporate Governance and Ethics in Croatian Corporations. The Business Review, 16(1), 141-148. Psaros, J 2009, Australian corporate governance: a review and analysis of key issues, Pearson Education Australia, Frenchs Forest. Retrieved April 18, 2011 from, http://library-resources.cqu.edu.au/cro/protected/acct19083/acct19083_cro4552.pdf Velasquez M., Andre, C., Shanks S.J.T., and Meyer, J.M. (2010). What is Ethics? Retrieved April 18, 2011 from http://www.scu.edu/ethics/practicing/decision/whatisethics.html Skouloudis A, Evangelinos K, Nikolaou I & Filho W L. (2011). An overview of corporate social responsibility in Greece: Perceptions, developments and barriers to overcome. Business Ethics: A European Review, 20(2), 205-226. Read More