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Ethics in Financial Business Decisions
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Ethics in Financial Business decisions
The work I reviewed begins with a simple introduction explaining the roots of ethics in America wrought with quotes from our earliest leaders including George Washington and John Adams. Additional quotes identify and support the “Ten Universal Values” of “honesty, integrity, promise-keeping, fidelity, fairness, caring, respect for others, responsible citizenship, pursuit of excellence, and accountability (Smith & Smith, 2003). The article identifies the purpose of ethics in business as being “to direct business men and women to abide by a code of conduct that facilitates, if not encourages, public confidence in their products and services” (Smith & Smith, 2003).
The articles intent is to provide a clear understanding of the importance of ethics in the business and a bit more specifically, the accounting arenas, when it divulges that the American Institute of Certified Public Accountants (AICPA) has adopted a code ethics for accounting professionals and further states that all three major accounting professional organizations have ethics codes.
The article attempts to drive home the point that ethics are an integral learned part, if not the absolute foundation, of the success or failure of a business and lays the responsibility of ethical education past its rudimentary levels on the educational facilities and businesses that employ and engage new workers in the business world. The work provides that while ethics must be taught on the home front that that level of education merely sets the foundation for ethical thinking and decision making, but that there is no structure atop the foundation if these values are not shored up by continuous exposure to the values that comes from higher levels of education and subsequently during ones employment.
This article reinforces, on a much grander scale, what our assigned readings for our first week of class offers in respect to ethical decision making. At the beginning of these weeks’ readings we are introduced to Enron, WorldCom, and Tyco, three huge conglomerates that were virtually destroyed by the unethical business practices of their executive managements and the accounting firm that aided in the un-disclosure of certain financial facts that would have made these corporations far less attractive to investors. The public relies heavily upon the information that is provided by the accounting firms that assume the responsibility of tracking and reporting a businesses financial position. Unfortunately, in the cases of Enron and WorldCom the accounting firm of Arthur Anderson was pressured to “meet the numbers” that would solidify their positions as profitable entities encouraging investment.
I happen to work for the world’s largest aircraft manufacturer, Boeing. This company has been building commercial and military aircraft for over 100 years, and to this day is still highly regarded as on e of the most ethical businesses today. However, this claim to fame has bee challenged on numerous occasions as of late with three major issues. The first involved an ex-employee of rival Lockheed-Martin that stole thousands of propriety documents when he left their employee and used these documents for the betterment of Boeing when he came to work for them. The other two ethically dilemmas that the company was cast into involved the hiring of an ex-government official after she retired from the government in return for favorable contract awards during her employ there and the scandalous affairs of a past CEO, Phil Condit. While none of these had basis in financial aspects of the company, they certainly affected the bottom line when contracts were held from the company. Since the days of these unethical practices Boeing has learned from its mistakes and now takes great strides in assuring that every single employee in the company operates under the highest ethical standards. Corporate leaders have recommitted to ethics and mandate that this recommitment is mimicked by all on an annual basis.
The article makes the statement that “The battle to maintain a high level of accounting and business ethics is effectively a battle for freedom” and that “unethical behavior is a dagger in the heart” (Smith & Smith, 2003). This statement holds so true when a company relies heavily on a global perception of righteousness for its sustenance. At this point in Boeings life, with the recommitment to ethics that they have adopted I’d be out of my league to make recommendation for the improvements of Boeings ethical policies and practices. The company has already examined every possible means to instilling the highest level of ethical standards in its workforce and has employed people far wiser than I to ensure that the company never realizes the pains of its past again.
While most companies choose to make law abiding decisions, such as does Boeing, there are still those that will always try to skirt the system. For those, there is the Sarbanes-Oxley Act of 2002. The act makes noncompliance with security violations much less attractive to the would be shysters of the corporate world due to its criminal and civil penalty provisions. The act also encourages independent auditing by certified external auditors, and requires elevated levels of corporate disclosure where Executive salaries, financial reports, and insider trading are concerned. The act does prove to be a huge burden on some companies, but compliance with its provisions gives the investing world a greater level of confidence in their investment activities.
In a perfect world there’d be no need for such an act, but as long as managers choose to ignore ethical decision making practices the need is real. We can only hope that the day will come when all managers realize that honesty was, is, and always will be the best policy.
Reference
Smith, K. & Smith, L. M. (2003, June 21). Business and accounting ethics. Retrieved March 19, 2006, from http://acct.tamu.edu/smith/ethics/ethics.htm