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Establishing a Code of Ethics


July 2002 If your company does not already have an ethics program, there is no better time than now to put one in place. Barraged by WorldCom, Xerox, Enron, Tyco, and others, everyone from investors to employees are skeptical of the trustworthiness of company statements.


According to Charles Calhoun, a forensics examiner and ethics consultant, companies should consider implementing an ethics program to set the tone for the organization and facilitate an environment to make better decisions for the employees.
 
In a recent CPA Report segment, Calhoun outlined the following requirements to get an ethics program started.
  • A typical corporate code of ethics outlines what the employees are to strive towards. All the altruistic ideas -- such as being honest and being fair -- should be included.
  • A code of conduct should be minimum standards. Anybody who may be caught lying, cheating, or stealing is subject to termination. 
  • Both of these, the code of ethics and the code of conduct, are things that should be looked at by attorneys. Not written by attorneys, but reviewed by them. 
  • An ethics officer should be placed in charge of overseeing the ethics program and serve as a a catalyst for getting the ethics program started.
  • The ethics code should be distributed to each employee upon being hired and signed at that time. It could also be released on an annual basis to be reviewed by employees. 
  • Training can be provided by management in-house, Human Resources personnel, or a third party coming in and providing the programs. 
  • A tone must be set by example by senior management on a day-to-day basis. If you see that a senior executive is padding the time and expense reports, then that sends a negative message to employees. If you have a management team and style that's fair and equitable, it is more than likely that other employees will follow that example.
For more information on how to establish a corporate ethics program, including how CPAs can be involved in ethics audits, check out the SmartPros CPE segment this article is excerpted from: Auditing Practice: Time for an Ethics Audit?  This 1 credit course is available individually for $44.99, or included with a subscription to The CPA Report.

2002 SmartPros Ltd. All Rights Reserved.

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