Developing and Implementing an Effective Ethics Program Part 2 Answer Key

32. Discuss the advantages and disadvantages of implementing an ethics program with a compliance orientation versus one with a values orientation. Is one better than the other at maintaining an ethical organization? ANSWER: Research into compliance- and values-based approaches reveals that both types of programs can interact or work toward the same end, but a values orientation has the added benefit of sparking ethical reasoning among employees. Values-based programs increase employees’ awareness of ethics at work, integrity, willingness to deliver information to supervisors, use of reporting mechanisms, and perception that ethical decisions are being made. Compliance-based programs are linked to employees’ awareness of ethical risks at work and a clear understanding of rules and expectations that facilitates decision making. In the final analysis, both orientations can be used to help employees and managers; however, a values-based program is the foundation of an organizational ethical culture. 33. Which document serves the general public and also addresses distinct groups such as stakeholders? a. Statement of values b. Code of conduct c. Code of ethics d. Federal Sentencing guidelines e. Ethics policies ANSWER: a 34. The only way to develop an ethical corporate culture is to provide character education to existing employees or hire employees with good character and sensitize them to ethical issues. a. True b. Fals e ANSWER: False 35. In many cases, a coherent ethical corporate culture does not evolve through independent individual and interpersonal relationships. a. True b. Fals e ANSWER: True 36. The FSGO encourages federal judges to reduce or eliminate fines for firms with extensive compliance programs that make due diligence attempts to abide by ethical and legal standards. a. True b. Fals e ANSWER: True 37. Companies should model their ethics training and communication initiatives after those of their competitors'. a. True b. Fals e ANSWER: False 38. The most effective hotlines operate on an anonymous basis and are supported 24 hours a day, 365 days a year. a. True b. Fals e ANSWER: True 39. One common problem found with corporate codes of ethics is that the codes were written too legalistically. a. True b. Fals e True ANSWER: 40. An ethics audit should be conducted regularly. a. True b. Fals e ANSWER: True 41. Which of the following is important in defining the scope of the audit process? a. The types of teams involved in the process b. Available opportunities the business has to manage ethics c. Who has been assigned to oversee the audit d. Government regulations outlining the process e. Deciding on how to verify the results ANSWER: b 42. During which step of the ethics auditing process does an organization identify the tools or methods for measuring progress in improving employees’ ethical decisions and conduct? a. Secure commitment of top managers and directors b. Establish a committee to oversee the audit c. Define the scope of the audit d. Collect and analyze relevant information e. Verify the results d ANSWER: 43. During which step of the auditing process should a firm examine all documents that make explicit commitments to ethical, legal, or social responsibility? a. Gain support of top management and board of directors b. Establish a committee to oversee the audit c. Define the scope of the audit process d. Review the firm’s mission, goals, values, and policies e. Have the results verified by an independent party ANSWER: d 44. Ideally, which of the following should oversee an ethics audit? a. The board's financial audit committee b. The CFO c. The CEO d. Outside consultants e. Secondary stakeholders ANSWER: a 46. An independent assessment of the quality, accuracy, and completeness of a company's social or ethics report is known as _______. a. complianc e b. verificatio n c. auditing d. analysis e. validation ANSWER: b 47. Which of the following is the final step in the ethics-auditing process? a. Define the scope of the audit b. Secure the commitment of top managers and directors c. Collect and analyze data d. Report the findings e. Verify the results ANSWER: d 48. Describe the stages of conducting an ethics audit. ANSWER: The first step in conducting any audit is securing the commitment of the firm’s top management and, if it is a public corporation, its board of directors. Without this support, an audit will not improve the ethics program or the corporate culture. The next step in the framework is to establish a committee or team to oversee the audit process. Ideally, the board of directors’ financial audit committee oversees the audit, but this does not happen in most companies. In any case, this team should include employees knowledgeable about the nature and role of ethics audits, and those people should come from various departments within the firm. The third step involves the ethics audit committee establishing the scope of the audit and monitoring its progress to ensure it stays on track. The scope of an audit depends on the type of business, the risks it faces, and the opportunities it has to manage ethics. Because ethics audits generally involve comparing an organization’s ethical performance to its goals, values, and policies, the fourth step of the audit process should include a review of the mission statement and strategic objectives. It is important to examine all of the firm’s policies and practices with respect to the specific areas covered by the audit. The fifth step in the ethical audit framework is to identify the tools or methods for measuring a firm’s progress to improve employees’ ethical decisions and conduct. The firm should collect relevant information for each subject matter area. Stakeholder involvement is another component in the successful implementation of an ethics audit since they yield significant insights. Once this information is collected, the firm should compare the internal perceptions to those identified in the stakeholder assessment and summarize its findings. The sixth step is to have an independent party—such as a social/ethics audit consultant, a financial accounting firm offering social auditing services, or a nonprofit special interest group with auditing experience—verify the results of the data analysis. The seventh and final step in the framework is issuing the ethics audit report. This involves reporting audit findings through a formal report to the board of directors and top executives and, if approved, to external stakeholders. 49. Which of the following statements about ethics audits are true? (Select four) a. They provide an opportunity to measure conformity to the firm's desired ethical standards. b.They are a mandatory component of an ethics program. c. They provide an objective method for demonstrating a company's commitment to improving strategic planning, including its compliance with legal and ethical standards and social responsibility. d.They are a major component of the ethics program. e. They are systematic evaluations of an organization's ethics program and performance to determine whether it is effective. ANSWER: a, c, d, e 50. Which of the following is a tool that companies can employ to identify and measure their ethical commitment to stakeholders? a. Ethics audit b. Social audit c. Financial audit d. Performance audit e. Technology assessment ANSWER: a 51. Describe an ethics audit and explain its benefits. ANSWER: An ethics audit is a systematic evaluation of an organization’s ethics program and performance to determine effectiveness. Ethics auditing is a tool companies can employ to identify and measure their ethical commitment to stakeholders. The auditing process can highlight trends, improve organizational learning, and facilitate communication and working relationships. Auditing can also help companies assess the effectiveness of their programs and policies, which often improves their operating efficiencies and reduces costs. Information from audits and reports can allow a company to ensure it achieves the greatest possible impact with available resources. The process of ethics auditing also helps an organization identify potential risks and liabilities and improve its compliance with the law. Furthermore, the audit report may help document a firm’s compliance with legal requirements as well as demonstrate its progress in areas where it previously failed to comply. For organizations, one of the greatest benefits of the auditing process is improved relationships with stakeholders who desire greater transparency. 52. Because ethics audits are voluntary, there are fewer standards a company can apply with regard to reporting frequency, disclosure requirements, and remedial actions that it should take in response to results. a. True b. Fals e ANSWER: True 53. A performance management tool that details a company’s performance through financial and nonfinancial perspectives, giving management a comprehensive view of the business, is called _______. a. Global Reporting Initiative b. ESG c. the ethics scoreboard d. the balanced scorecard e. the triple bottom line ANSWER: d 54. Which of the following provides international guidelines for compliance management? a. ESG b. Open Compliance Ethics Group c. Balanced Scorecard d. ISO 19600 e. Global Reporting Initiative ANSWER: d 55. The measuring of social, financial, and environmental factors (or people, places, and planet) that recognizes business has a responsibility to positively influence a variety of stakeholders, including customers, employees, shareholders, community, and the natural environment is defined as the _______. a. Balanced Scorecard b. integrity management c. triple bottom line d. ESG e. Global Reporting Initiative ANSWER: c 56. Identify the consequences of companies being viewed as moral agents. ANSWER: Increasingly, corporations are viewed not merely as profit-making entities but also as moral agents accountable for their conduct to their stakeholders— including employees, investors, suppliers, governments, and customers. As moral agents, companies are required to obey the laws and regulations that define acceptable business conduct. Employees have an ethical obligation to responsibly think through complex ethical issues to contribute to the ethical conduct of the corporation as a whole. Though obviously not a person, a corporation can be considered a moral agent in society created to perform specific social functions. It is therefore responsible to society for its actions. Because corporations have characteristics of agents, responsibility for ethical behavior is assigned to them as legal entities, as well as to individuals or work groups they employ. 57. Which of the following are responsibilities of an ethics officer? (Select four) a. Assessing the needs and risks an organization-wide ethics program must address b. Developing and distributing a code of conduct or ethics c. Reviewing and updating the code of conduct or ethics d. Conducting training programs for employees e. Operating the ethics hotline ANSWER: a, b, c, d 58. Describe the ESG framework. ANSWER: The most widely used framework for evaluation of firm performance in the areas of environmental, social, and governance is ESG. The environmental considerations include issues related to climate change, natural resources, and pollution and waste. The social considerations include how you treat key stakeholders (human capital), product liability, potential stakeholder opposition, and varying social opportunities. Governance relates to corporate governance and corporate positive (e.g., business ethics programs and transparency) and negative behavior (e.g., anticompetitive behavior and corruption).