[caption id="attachment_65518" align="alignright" width="235"] Dada Adefolami[/caption] By Dada Adefolami What is ethics? Ethics is concerned with what society considers being right or wrong. It therefore relates to standards of behaviour. At first this may appear to overlap with one purpose of law, in that law seeks to address behaviour of which society disapproves. However, ethical principles may be adopted that discourage behaviour that is undesirable but legal. For example, sum of the expenses regarding claims for reimbursement by politicians and office holders, these people responded to criticism by stating that they had done nothing illegal, the public holders may still regard inappropriate and unethical expenses claims as legitimate The ethics that leaders in an organization use to manage employees may have an effect on the morale and loyalty of workers. The code of ethics leaders use determines discipline procedures and the acceptable behavior for all workers in an organization. Ethical leadership is leadership that is directed by respect for ethical beliefs and values and for the dignity and rights of others. It is thus related to concepts such as trust, honesty, consideration, charisma and fairness. Leadership is both a research area and a practical skill, regarding the ability of an individual or organization to “lead” or guide other individuals, teams, or entire organizations. Controversial viewpoints are present in the literature, among Eastern and Western approaches to leadership, and also within the West, on US vs. European approaches. Ethics lacks the certainty usually provided by the law, as individuals may consider some things that are legal to be unethical. In turn, views on morality differ, so even when ethical principles are codified by professional bodies or commercial organisations, they may be regarded differently according to the moral principles of each individual. All professions rely on their practitioners adopting not only legal but ethical standards. If accountants behave unethically, their clients will lose confidence in their services, and society in general will no longer trust them or feel that they act in the public interest. The potential effects of this would be devastating, not only to accountants themselves, but the profession and its stakeholders, including individuals, organisations and others affected directly or indirectly by their work. Ethics helps to make the society more stable. ethics help to choose right actions over wrong one. Ethics is very important since it is an essential part of the basic civilized society, so the society with lack of ethics will fail sooner or later. Ethics are important because without ethics people would not have ideas of right and wrong. An ethical person lives by standards. Namely, you would obey the laws and further than that you would be honest and upright in all your dealings. Therefore, you would not “fudge” on the gray areas, but you would uphold high standards of conduct. Approaches to ethics Ethical behaviour may be defined in terms of duties. Many philosophers have argued that certain core duties are imperatives, and as such will always apply, regardless of circumstances. Absolutists (or dogmatists) admit no exceptions, as these duties are believed to be sacrosanct. They often have their foundations in religion or deeply embedded values, universally accepted by society. The most common examples are the duties not to kill and to always tell the truth. This approach to ethics is sometimes called the deontological approach (meaning ‘duty’). Codes of conduct issued by professional bodies, and corporate codes issued by business organisations, define responsibilities in terms of duties, and may provide guidance on the more common exceptions that apply. As it is impossible to define the appropriate response to every single human interaction, these codes can only serve as sets of minimum standards and have to rely on the inherent willingness of practitioners to deduce what is right or wrong. Ethical behaviour is characterized by honesty, fairness and equity in interpersonal, professional and academic relationships and in research and scholarly activities. Ethical behaviour respects the dignity, diversity and rights of individuals and groups of people. Ethical behaviour may also be defined in terms of consequences. This is sometimes referred to as the teleological approach here; the right course of action is that which will result in the most acceptable outcome. Most acceptable to whom? This is dependent on the ethical stance of those who determine what an acceptable outcome is. Utilitarian’s regard the right course of action as that which will benefit the majority, or serve the ‘greater good’. In doing so, the ethical decision may disregard any impact on the minority, believing that they should defer to the greater needs and influence of the majority. On the other hand, pluralists pursue consensus in order to accommodate the needs of both the majority and the minority. Finally, egoists favour courses of action that are right for them. This last, seemingly selfish approach to right and wrong was supported by Adam Smith, the 18th century UK economist, who suggested that pursuit of self-interest is often a catalyst for the creation of prosperity through entrepreneurial innovation and risk taking. A practical application of these concepts may be considered in relation to the conflicting views on the use of mobile telephones in cinema hall. Should attends be denied the right to use their mobile telephones while relaxing themselves. If one assumes that the majority will tolerate constantly ringing telephones and loud conversations during the relaxation: · The utilitarian will propose that mobile telephones are acceptable to most commuters, so the minority will have to put up with them · The pluralist accommodates both groups by setting aside a limited number of ‘quiet’ carriages in which mobile telephones cannot be used · The egoist decides on the course of action that is most desirable for him, which may in turn be based on profit motive or personal belief. Using the duty-based and consequentialist-based approaches to ethical decisions may result in different potential outcomes. Consider the case of a highly successful and dynamic chief executive officer who has been caught up in a scandal relating to his personal life, reported widely in the national newspapers / Magazine and on television, with resultant embarrassment to his organisation. Should he resign? The duty-based approach may suggest that, as a senior executive, he should adopt high moral standards in and out of work, and because he has failed to meet those standards, he should resign. The consequentialist may agree, stating that by not resigning it will result in damage to the reputation of the organisation as long as he remains in office. However, the consequentialist may also disagree; arguing that by resigning the chief executive officer deprives the organisation of his knowledge, skill and experience, which will result in a lack of leadership and direction, at least in the short term. This argument may be reinforced by the view that, in future, other organisations may choose to accept resignations on the same basis; even though the individual’s personal life should have nothing to do with his work. Ethical principles Led by international bodies such as the International Federation of Accountants (IFAC) and its many member associations and institutes, several principles have been identified as being of crucial importance to the profession: 1. integrity 2. objectivity 3. professional competence and due care 4. confidentiality 5. Professional behaviour. It is not adequate to simply identify and articulate the above principles. In order to put them into practice, organisations must adopt values that will promote adherence to the principles, thereby maintaining the confidence of stakeholders. Accountants/ consultants have to recognise that their duties are not limited to what clients expect of them, and must accept that they have a fiduciary duty, or duty of absolute trust, to a wide range of stakeholders. Below sets out additional values that should be adopted. ORGANISATION AL VALUES OpennessBeing full and complete in the provision and disclosure of information and reasoning behind decisions TrustRelying on the judgments and information provided by other professionals, and embracing values that encourage others to rely on our judgments HonestyNot only telling the truth, but being prepared to give complete information on which others can fully depend RespectTreating others with dignity and adopting a professional manner EmpowermentEnsuring that those who are entrusted with responsibilities have the authority to carry out the tasks necessary to fulfill their duties AccountabilityTaking full responsibility for the outcomes of our work, including work carried out on our behalf by others CORPORATE CODES OF ETHICS Corporate codes of ethics are published by private sector organisations in order to communicate their values and beliefs to stakeholders. These include: 1. Customers, whose buying decisions may be influenced by ethical considerations 2. Shareholders, whose investment decisions may be influenced by ethical factors, International Investors will be influence. 3. Employees, who have to know the standards expected of them 4. Suppliers, who need to understand the expectations of their customers and also that they will be treated ethically during the course of the commercial relationship 5. Lobby groups, who may have specific interests in certain practices of the organisation 6. The community in which the organisation is situated, which may seek reassurance that the organisation will act in its interest as an employer and as a good ‘corporate citizen’. Contents of a code of ethics Core principles. These should refer not only to its commercial objectives but the manner in which they will be pursued. For example, they may state social and environmental commitments as well as best practices that will be adopted FinancingHow share and loan capital will be raised. This must also allude to how the organization will deal with providers of share and loan capital, confirming that its published statements will be honest CustomersCustomers may refer to the statement in order to confirm the minimum standards that can be expected from their purchases, especially in terms of benefits to be derived from the products and services. They may also be interested in matters such as customer service and distribution channels, supply chain policies (such as ‘Fair-trade’ commitments, organic ingredients, and so on) SuppliersThe code may refer to how suppliers will be chosen and the standards to which they must adhere. It may also set down the terms of business on which suppliers are engaged EmployeesThe code should confirm employment practices in relation to engagement of workers, including equal opportunities and diversity, working conditions and how employees will be developed CommunityOrganizations bring value to the community by providing employment and generating income, but may also have adverse effects through traffic congestion, emissions and even unemployment if the company decides to downsize or relocate. The code may provide assurances in respect of such factors Lobby groupsLobby groups express specific concerns relating to factors such as raw materials, working conditions and environmental impact. The code may address such issues by stating broad policies THE ROLE OF REGULATORY AND PROFESSIONAL BODIES Ethical behaviour can be promoted, or even enforced, in several ways. If specific unethical practices are considered to be widespread and detrimental to the public at large, a national government will take action to curtail such practices by making them illegal to Nigeria culture and practice (WAR AGAINST INDISCIPLINE). The most obvious examples are discrimination in the workplace and selling high interest consumer loans to vulnerable people. Many governments in the past have outlawed various forms of discrimination by passing national legislation and have introduced disclosure requirements at pre-application stage when personal borrowers are considering taking out loans that many not be in their best interests. It is not possible to legislate on every matter of concern; however, so professional bodies have a vital role to play in controlling unethical behaviour. Professions are characterised by offering specialist services that are underpinned by certain minimum educational standards. Unfortunately, although it is possible to teach ethics, this does not ensure that those who learn about it will necessarily become ethical as a result. For this reason, most professional bodies set ethical standards to which all their members are expected to adhere. Such as ICAN, AIBN in Nigeria to mention view .Failure to do so may result in censure or even removal from membership. The ICAN and Financial profession has to consider ethical issues not only nationally but also in a global context, in this regard that IFAC has a role to play. IFAC is a global representative body for accountants. It develops international standards on ethics, auditing and assurance, education and public sector accounting standards. Under the auspices of IFAC, the International Ethics Standards Board for Accountants (IESBA) develops ethical standards and guidelines. In turn, the work of IESBA is overseen by the Public Interest Oversight Board. The ICAN Code also defines fundamental principles. The Code then goes on to elaborate on specific responsibilities in relation to many aspects of practice, it elaborates on ICAN website. [caption id="attachment_65518" align="alignright" width="235"] Dada Adefolami[/caption] ETHICAL CONFLICTS AND DILEMMAS As the number of human interactions in business is infinite, it follows that professional business consultants will be faced with conflicts of interest and ethical dilemmas that they have to address. Conflicts of interest arise from various sources. The consultant may be asked to: 1. take a decision on a matter in which the individual has a personal involvement, such as where the consultant has a family or personal relationship with the client 2. advise a company that is in direct competition with an existing client 3. Support two clients who are in competition with one another. The Code should provide clear guidance on conflicts of interest, states thatindividual should not accept engagements in which such conflicts arise, or even where there is a possibility of such conflicts arising. Consultant should evaluate the threats arising from conflicts and apply relevant safeguards against the threats materialising. If in doubt, the consultant should disclose the conflict to relevant parties. Ethical dilemmas arise when the consultant has to consider two or more seemingly incompatible ethical obligations. For example: 1. He may be asked by a manager to remain silent about certain matters that would have an adverse impact on the financial accounts of an organisation, thereby testing the consultant’s loyalty to the manager on the one hand, and his responsibilities as a professional on the other. 2. He may consider that the policies of his employer are unethical and may find it difficult to reconcile personal values with those of the organisation 3. He may be advising a longstanding client who is also a personal friend, only to discover that one of the client’s family is behaving dishonestly, thereby playing the bond of friendship against the professional duty to give objective, truthful advice. Below framework is through which ethical dilemmas may be addressed. When faced with ethical conflicts, the decision taker should consider: 1. The facts of the situation 2. The ethical principles involved 3. Related fundamental principles 4. Relevant internal procedures 5. The alternative courses of action 6. Consequences of each alternative course of action. Let digesting on deferent types of leadership: A leadership style is a leader’s style of providing direction, implementing plans, and motivating people. There are many different leadership styles that can be exhibited by leaders in the political, business or other fields Transformational leadership is a style of leadership where the leader works with employees to identify the needed change, creating a vision to guide the change through inspiration, and executing the change in tandem with committed members of the group. Transactional Leadership, also known as managerial leadership, focuses on the role of supervision, organization, and group performance; transactional leadership is a style of leadership in which the leader promotes compliance of his/her followers through both rewards and punishments. An authoritarian leadership style is being used when a leader dictates policies and procedures, decides what goals are to be achieved, and directs and controls all activities without any meaningful participation by the subordinates. This leader has full control of the team leaving low autonomy within the group. Servant leadership is both a leadership philosophy and set of leadership practices. Traditional leadership generally involves the accumulation and exercise of power by one at the “top of the pyramid.” By comparison, the servant-leader shares power, puts the needs of others first and helps people develop Servant leadership is a very popular leadership model. It was developed by Robert K. Greenleaf in 1970. The servant leader serves the people he/she leads, which implies that employees are an end in themselves rather than a means to an organizational purpose or bottom line.and perform as highly as possible. Finally Ethics is not an easy subject but one that has become critically important in a business environment in which failure to adhere to proper standards can have a devastating effect on organisations, investors, suppliers, employees, customerand, of course, a country all over. Looking back over the past years in Nigeria, there have been several high-profile scandals that have all involved the human ethical failings deal to corruption to some degree. Perhaps this is one of the very reasons why government must constantly restate their commitment to ethical values and high standards of moral behaviour in the offices. The system behavioral ethics is a new field of social scientific research that seeks to understand how people actually behave when confronted with ethical dilemmas. It refers to behavior that is judged according to generally accepted norms of behavior. Ethics is very important since it is an essential part of the basic civilized society, so the society with lack of ethics will fail sooner or later. Ethics are important because without ethics people would not have ideas of right and wrong. Ethics help to make the society more stable. ethics help to choose right actions over wrong one. Organizational culture encompasses values and behaviors that “contribute to the unique social and psychological environment of an organization.” Dada Suraju Adefolami, Professor of Finance, School of Business Administration, UNEM University, Costa Rica, is a Finance / management Consultant and Certified Forensic Accountant. You can reach him via: surajudada@yahoo.com: 08052043855