ETHICS: THEORIES OF ETHICS

Introduction to Ethics The word ethics comes from the Greek ethos, meaning something like morals. In fact, ethics is defined as the systematic reflection on what is moral. In this definition, morality is the whole of opinions, decisions and actions with which people express what they think is good or right. We can identify two kinds of Ethics: The descriptive ethics is involved with the description of existing morality. It is about facts. Descriptive judgments are therefore true or false. The prescriptive ethics is also known as the normative ethics. This branch of ethics actually judges morality. Normative judgments are therefore value judgments: they indicate whether something is good or bad. Normative Ethics Normative Relativism - states that all moral points of view are relative. (1) The morals of one person are not necessarily equal to the morals of another person. (2) Certain norms and values are better than other norms and values is also not acceptable. The problem with this theory is that it allows all norms and values. Absolutism On the other hand is absolutism, also known as universalism. It states that there is a system of norms and values that is universally applicable to everyone, everywhere at every time. Absolutism makes no exceptions: a rule is a rule. However, there is no set of norms and values that never contradicts itself. So, absolutism in general doesnt work. Classical Theory Socrates, the patron saint of moral philosophy: We ought never to harm anyone, We ought to keep our promises We ought to respect our parents and teachers The central theme in virtue ethics is shaping people into morally good and responsible creatures influenced by Aristotle.

Deontological maintains that the basic judgment of obligation or duty are purely particular (e.g. - Kant) Teleological result of the deed (happiness, pleasure as opposed to pain, sadness).

Kantian Theory Immanuel Kant has developed the most well known system of duty ethics: the Kantian theory. A core notion here is autonomy. A man should place a moral norm upon him and obey it. This is his duty. He should then, on his own, be able to determine through reasoning what is morally correct. The Kantian theory is part of monistic duty ethics: Universality principle: Act only on that maxim which you can at the same time will that it should become a universal law. Reciprocity principle: Act as to treat humanity, whether in your own person or in that of any other, in every case as an end, never as means only. Negativity of Kantian Theory of Ethics In Kants theory, rules can not be bent. This reminds us of absolutism. So, the question arises whether all the moral laws form a consistent system of norms. Another downside is that Kantian theory prescribes to rigidly adhere to the rules, irrespective of the consequences. But in real life, following a rule can of course have very negative consequences. Kants theory does not deal with these exceptions. Utilitarianism Promotes greatest good of the greatest number (John Stuart Mill, teleological) The principle of utility is the ultimate standard It is to be appealed to at the level of rules rather than at the level of particular judgments. Ethical egoism one is always to do what will promote his own greatest good (Hobbes, Nietzsche) Social Justice: Equality Distributive justice Treating people equally (may not be identically) Does not mean making lives equally good or maintaining their lives at the same level of goodness Ethics of Love (Judeo-Christian) Utilitarian theology (John Locke)

VALUES
What is a value? Qualities, characteristics, or ideas about which we feel strongly. Our values affect our decisions, goals and behavior. A belief or feeling that someone or something is worthwhile. Values define what is of worth, what is beneficial, and what is harmful Values are standards to guide your action, judgments, and attitudes. You have been given a check for Rs.1000.00 to do whatever you like with it. What would you do with it? Share with the class what you would do with it.

Conclusion: What you spend the money on has everything to do with what you value What things did you do during the past week? What you choose to do with your time also has everything to do with what you values.

Hypocrite One who subscribes to one set of values, and does another. Immaturity - One who has not identified his values. Immaturity: Unclear values Drifters Flighty Uncertain Apathetic Maturity Clear values Life of purpose Meaning and direction

Direction: Values Goals Behavior Self-value Values give direction and consistency to behavior. Values help you know what to and not to make time for. Values establish a relationship between you and the world.

Values set the direction for ones life.

Where do we get values? our homes, school, society, friends, TV, religion, music, books, families, culture, employers, Time-period in which you were raised (70s anti-establishment, peace, individuality. 80s money, prestige, doesnt get caught, etc. 90s earth, green peace, health and fitness), etc. Your age will greatly influence your values. Different people and things influence you at different ages: Ages 1-7 --- parents Ages 8-13 --- teachers, heroes (sports, rocks, TV) Ages 14-20 --- peers (values because of peers or peers because of values?) Ages 21+ your values are established, but you may test your values from time to time.

Value versus Facts: Values are things we feel should, ought, or are supposed to influence our lives.

VALUE: All people should be active in a specific religion. VALUE: The best time to buy clothing is when the price is discounted. A value is a statement of ones personal beliefs. Facts simply state what actually are. It is easy to confuse values with facts.

FACT: Many people are active in a specific religion. FACT: The most economical time to buy clothing is when the seasons change and the price is reduced. A fact is established by observation and measurement.

Values and Behaviors: Happiness comes from letting values decide your behavior and goals.

Values can change over a life-time as your experiences change your view.

Types of Values:

Moral Material Aesthetic Intrinsic Extrinsic Universal/Indian Group specific values

If you stand for nothing you fall for anything. Its not doing things right, but doing the right things. Core Values

The core values of an organization are those values which form the foundation on which employees perform work and conduct themselves. We have an entire universe of values, but some of them are so primary, so important to us that through out the changes in society, government, politics, and technology they are STILL the core values we will abide by. In an ever-changing world, core values are constant. Usually summarized in the mission statement.

Core Values Govern personal relationships Guide business processes Clarify who we are Articulate what we stand for Help explain why we do business the way we do Guide us on how to teach Inform us on how to reward Guide us in making decisions Underpin the whole organization Require no external justification Essential tenets

Not Core Values Operating practices Business strategies Cultural norms Competencies Changed in response to market/ administration changes Used individually

Good Corporate Citizenship assessment model

The Good Corporate Citizenship assessment model was developed in 2006 by the Sustainable Development Commission with the support of the Department of Health and revised in 2009 in cooperation with the NHS Sustainable Development Unit. This presentation and the Good Corporate Citizenship assessment model and are aimed at an NHS audience. What is Good Corporate Citizenship? Social, economic and environmental considerations inform your decisions Your day to day activities contribute to sustainable development You use NHS influence and resources to build a healthy and sustainable environment Here to help: A self-assessment model Produced so that NHS organisations can: assess and improve contribution to local economy, community and the environment find out more about good corporate citizenship be inspired by best practice access resources, events and on-line forum Choosing Health white paper commitment Saving Carbon, Improving Health: NHS Carbon Reduction Strategy for England commitment

Key Areas Travel Area planning Active travel Business travel Traffic management Service delivery and estate design Travel Procurement Facilities management Workforce Community engagement Buildings

Procurement Procurement skills Procurement process Engaging suppliers Minimising waste Ethical procurement

Facilities Management Energy use and carbon Waste Water Hazardous substances Green space

Workforce Diversity and inclusion Valuing workforce Healthy workplace Childcare and carer Learning and development

Community Engagement Local partnership and planning Community participation Healthy and sustainable food choices Assets and resources Communication

Buildings Planning Design Sustainable procurement Energy and carbon Green space

The Role of HR in Corporate Governance

Patrick Wright Cornell University

UNETHICAL & ILLEGAL decisions of: Enron, WorldCom, Adelphi, Qwest, Tyco, Arthur Andersen, and K-Mart

Poll by Harris Interactive found that 68% believe that corporate executives are less honest and trustworthy than they were 10 years ago Result: Crisis of trust Failure of senior members of the HR in playing leadership role in governance. The Centre for Advanced HR Studies (CAHRS) revealed that in some cases HR may have been remiss in creating systems and controls to discourage such actions, and perhaps even when HR executives are aware of such behaviors, they may not act. Senior HR leaders possess a fiduciary responsibility to shareholders and a moral responsibility to employees and it is necessary to examine how to effectively fulfil these responsibilities. Firstly, (a) the problem is not endemic to corporate executives and (b) that the incentives, controls and system worked well, but a few excessively shrewd and immoral individuals found ways to behave unethically Second, some have argued that spiraling executive pay forms the foundation of the current crisis. Third, the controls argument posits a lack of adequate corporate controls, primarily through board oversight and outside auditors, resulted in dysfunctional executive behaviors. Finally, some have attributed the problem to the system.

Solutions in 4 basic areas:

Selection of leaders, design of incentives, structuring of control systems (particularly Boards of Directors), and fixing the dysfunctional system. Problem stems from a few bad apples, or individuals who manipulated the system to benefit themselves. Most executives are honest, upright, and of the highest integrity, and people like Jeffrey Skilling (Enron), Dennis Kozlowski (Tyco), Bernie Ebbers (WorldCom) and the Rigas family (Adelphi) simply slipped through the system, achieve positions of power, and exploited their companies to enrich themselves.

Selecting right leaders Regards to competency models honesty/integrity as one of the most popular competencies. Out of 19 companies which provided CAHRS with their leadership competency models only 2 mentioned it. Candidates who (a) lack a moral compass, (b) possess excessive selfishness or greed, and/or (c) Have immense egos are ones who may be particularly prone to engaging in behaviors that ends up in scandal.

Greed & Capitalism The perfectly virtuous man desires not only to be loved, but to be lovelynot only praise, but praiseworthiness To feel much for others and little for ourselves,to restrain our selfish and to indulge our benevolent Affections constitute the perfection of human nature, (Adam Smith, 1790). Greed, opportunism, and selfishness exist when individuals seek to meet their own needs and desires at the expense of others. Egotism refers to an over high opinion of oneself. It can result in executives feeling they deserve whatever they can get. It clouds their ability to listen to negative feedback or contrary opinions.

INDICATORS that raise the flag: individuals who lie on expense reports, have extra marital affairs excessive focus on money, power, or self might also provide warnings; constant self-promotion Excessive debt beyond what reasonable income could support How an individual treats subordinates may provide insight into his or her character. HR must devote considerably more wide-eyed effort and attention to assessing the honesty and integrity of organizational decision makers. CEOs should be precluded from earning any outside income HR executives seemed either bought off (with huge pay packages of their own), implicitly threatened (with discharge for resisting these pay packages) or ignorant.

Ethics and HRM

K. Michele Kacmar Ethics, Morality and Values Ethics is the study of morality Morals are the standards used to judge right and wrong Values are the degree of conviction about the way to conduct life Conviction The degree of conviction to your values can be described as primary, secondary, or peripheral Primary core values, unchanging Secondary Important, but changeable occasionally Peripheral Values that are known but not lived by How Do We Get Values? Parents, family and friends Experiences The environment (media, education) Conflict of Values Dramatic outcomes can occur when individuals and groups hold conflicting core values: Religious wars Business scandals Crime Environmental Factors Over the last decade, ethical scandals in business have been on the rise: Enron WorldCom Tyco Health South How to Stop Unethical Behavior

 A combination of external regulations and compliance programs and voluntary corporate ethics programs is the most effective way to combat inappropriate corporate behavior (Trevino, Weaver, Gibson, & Toffler, 1999). External Regulations Sarbanes-Oxley Act (SOX) Requires CEOs and CFOs to sign statements making them personally responsible for the accuracy of the quarterly financial statements Knowingly misrepresenting the financials opens them up to punishments including fines and jail time Protection for whistleblowers Other External Regulations Other external regulations include regulations related to: Minimum wage Overtime compensation Discrimination Health and Safety Privacy Organizational Responses Codes of ethics including: Explicit standards of rules to be followed Corporate values statements Explicit Standards Explicit standards define precisely acceptable and unacceptable conduct such as accepting gifts and the amount allowable Corporate Values Statements Describes the core values the company wants its employees to exhibit including: How employees are to treat one another How employees are to treat customers and stockholders Effective Values Statements Must come from the top with the CEO being directly involved in its development Top management must actively disseminate the values statement and then live by it The values statement must be focused

HR Responses Conduct surveys to determine: What behaviors are routinely being rewarded and reinforced What values and attitudes are prevalent How strong the pressure to engage in misconduct is Take steps to eliminate and discourage reasons for misbehavior and introduce and encourage reasons to behave ethically Develop an appraisal system that rewards individuals for ethical behaviors and punishes those who act unethically HR can use its expertise to communicate with the workforce to get out the ethical message Costs of Corporate Ethics Violations $7 trillion in stock market losses Loss of jobs and retirement savings by employees Costs of Corporate Ethics Programs Costs of implementing and maintaining compliance to create an ethical business environment Human Costs Unethical business environments can: De motivated individuals Make good employees leave the company Attract unethical employees Lead to the lack of trust by the employees for the company Ethics Effectiveness Quick-Test Ethics Effectiveness Quick-Test asks eight questions about twelve different areas that can help to increase the ethical effectiveness in an organization Guidelines for Fostering an Ethical Culture Have a well developed policy and procedures manual Enforce policies Reward compliance Recruit ethical employees Create a division to oversee ethics

Conclusion Whenever you are required to make a difficult decision, especially one that is ethically challenging, select an option that you would be comfortable describing to the nation on the evening news

Code of Ethics: Relevance in Todays Scenario

Code of Ethics Essential for commanding the respect and confidence of the regulators and public at large. The Conduct of the Members is regulated under the Chartered Accountants Act.1949 and the regulations framed hereunder. Code of Ethics Objective Credibility Professionalism Quality of services Confidence

MISCONDUCT Unethical practices adopted by members of the Institute. Professional misconduct Any act or omission specified in any of the Schedules to the Act Other misconduct Any misconduct not specified in any of the Schedules to the Act even if it does not arise out of the professional misconduct. Professional Misconduct Members in Practice Part I First & Second Schedules Members in Service Part II First Schedule Members of the Institute generally Part III First Schedule P Part II Second Schedule

r o f e s s i o n a l M i s c o n d u c E n a c t m e n t s dO u t lh e e r s wu n rc i l ' s P o e c o m m e n d t o r y

Enactments

F i r C o u t o g u p

s t s c n c i l i v e P t o f i v

h e d ue lc e o n d S S c h e h a s C p o o u wn e ri l ' s PC o o c u n i s h m i se n t r e e y r e e a c r os m m e n d a H

i g h c o u r t H i g h c o u r t g i v e s t h e f i gn ia v l e s t h e f i p u n i s h m e n pt u n i s h m e n

Modes of initiating action Complaints Information Complaint Processing Steps

I n F o R C W R C o p y r m 8 A c t s D o c u e o n i n m a s e g f S d e C i s C ( 3 a n m t r a o t a e n o r t s n s m t e s s u u i d e C d n t i o p m b b e o p i e s ) d u l y v e O m i s s i o n s t a r y E v i d e n c e n l a e m m r e o i n n t f C t , s s u d d b y o e b m p r v e m b b C y y o l a d i t t e C R u o e n i n o d m n b p s p c i l r i f i e d g i v i n g

t R y l a o n e s R p e i n d o s a e n p n n d o t t e n n d t e n t

r i t t e e o C j o m

i t t e i t t e d

THE CENTRAL COUNCIL Consisting 30 Members 24 Elected Members 6 Nominated by Central Government Term : Three years Headed by President who is elected by the Council for One year term THE COUNCIL (II) Empowered to initiate enquiry into cases Where it is prima facie of the opinion that the member is guilty of professional or other misconduct. DISCIPLINARY COMMITTEE Enquiry conducted through one of the Standing Committees of the Council, namely, the Disciplinary Committee. Consists of five members Headed by Chairman who is President of ICAI Vice-Chairman who is Vice President of ICAI Other three members Out of the other three, one is Central Government Nominee

The First Schedule Part I of the First Schedule deals with the clauses describing professional misconduct in relation to Chartered Accountants in practice.

Part II of the First Schedule deals with the clauses describing professional misconduct in relation to Members of the Institute in Service.
Part III of the First Schedule deals with the clauses describing professional misconduct in relation to members of the Institute generally. The Second Schedule Part I of the Second Schedule deals with the clauses describing professional misconduct in relation to Chartered Accountants in practice requiring action by High Court. Part II of the Second Schedule deals with the clauses describing professional misconduct in relation to members of the Institute generally requiring action by High Court. Major Practical Issues

o Advertisement & Solicitation

o o o o Communication with Outgoing Auditor Compliance With Provisions of the Companies Act Acceptance of Fees, which are contingent upon the findings Engages in any Business or Occupation

Advertisement & Solicitation (Clause 6)

Govt. Tenders/Other Tenders

DOS PERMITTED TO PAY A REASONABLE AMOUNT IN OTHER AREAS OPEN TO CA & OTHER PROFESSIONALS:PERMITED TO PAY EMD/SD AT THEIR DISCRETION. IN NON-EXCLUSIVE AREAS PERMITED TO PAY REASONABLE AMOUNT OF EMD/SD.

DONTS RESPOND TO ADVERTISEMENTS GENERALLY. RESPOND TO TENDERS/CIRCULARS INVITING QUOTATIONS FOR PROFF. SERVICES RESTRICTED TO CAS. RESPOND TO ENQUIRIES ASKING FOR QUOTATION OF FEE Communication with Outgoing Auditor (Clause 8) DOS A statutory provision - applies to all audits. Meaning of Communication.

Effective Communication -- RPAD only. Proof of delivery.

 Misplaced commitment to clients interest. DONTS Send communications to the Previous Auditor after the commencement of AUDIT. Letters sent by Ordinary Post.

Compliance With Sec. 225 of the Companies Act (Clause 9) DOS Procedural requirements to be diligently adhered to. Special notice given at least 14 days before the general meeting. Notice to retiring auditor should be sent by regd. A.D. Replies received from the retiring auditor sent to all the members of the company, if any. After satisfying that the requirement of section 225 of the companies act has been complied with, the incoming auditor should first communicate with the retiring auditor as provided in clause 8 of Part I of First Schedule.

DONTS Relying on the verbal assurance given by the company about the compliance of sec. 225. Acceptance of Fees, which are contingent upon the findings (Clause 10) DOS In case of receiver or a liquidator, the fees may be based on a percentage of the realization of the assets. In case of valuer for the purposes of direct taxes and duties, the fees may be based on a percentage of the value of the property valued. DONTS Fees in respect of any prof. work / services, based on a percentage of profits, or which are contingent upon the findings, or results of such work. Engages in any Business or Occupation (Clause 11) DIRECTOR/PROMOTER/ PROMOTER DIRECTOR Permitted generally to be director simplicitor in any company. Permitted to be a promoter or signatory to the MOA & AOA of the Company. To be a director of the company irrespective of whether the objects include areas which do not fall within the scope of the profession of CA. PERMISSION GRANTED GENERALLY

 Employment under CA in practice/firm Private tutorships. Acting as surveyor/loss assessor under insurance act. PERMISSION GRANTED SPECIFICALLY

Full/part time employment in business concerns provided doesnt hold substantial interest. Full/part time employment in non- business concerns. Office of MD/Whole Time Director of body corporate provided he/relatives doesnt hold substantial interest. Interest in family business concerns. SECOND Schedule 1
Disclosure of information by Chartered Accountant without the consent of their clients. Expresses opinion on financial statement of business in which the Chartered Accountant, his firm/partner has substantial interest unless discloses in his reports. 2 Failure to disclose material fact. Failure to report a material misstatement. 3 Gross negligence Failure to verify securities Failure to reconcile bank balances Failure to check cash balances Failure to issue false certificate regarding maintenance of records 4 Failure to obtain sufficient information to warrant the expression of the opinion Failure to invite attention to material departure from the generally accepted procedure of audit. 5 Failure to keep moneys of clients in a separate banking account Opening of Bank Account Not Required Advance received against services Moneys recd. for expenses to be incurred with in a short period.

6 Opening of Bank Account Required Moneys recd. for expenses not to be incurred with in a short period. Money received as Trustee, Executor, and Liquidator etc.

The Impact of Culture on International Planning and Implementation of Marketing Strategy Components of Culture
We must look at the various dimensions of culture because these affect all aspects of the marketing process which incorporates marketing research, product design, promotion, distribution, planning as well as other functions of International business.

Language
The problems connected with translation are the difficulties of avoiding brand names which can have offensive or negative meanings in another language. For example, GMs model, the Nova, could be translated as doesnt go in Spanish. Also the word gift which has pleasant connotations in English actually means poison in German.

Body Language
This term denotes the various ways in which certain cultures convey meaning by means of signs, shrugs, facial expressions or eye movement. Such body language varies from country to country and strangers should make it their business to be aware and attuned to what is really meant by any of these methods of communication.

Religion
Religion is still a very powerful force in many societies and guides its adherents in all matters concerning rest days, fasting, diet, social customs, conduct of business and consumption patterns. Undertaking business trips or planning complex marketing campaigns during the month of Ramadan when people in Moslem countries fast from sunrise to sunset will certainly fail to gain enthusiastic response from local employees, agents or even customers.

In another instance, McDonalds were forced to change the nature of their main product, the beef burger, in India and replace it with chicken or vegetable-based products.

Social Structure
This is the number, distribution and proportions of the social classes in a given society, together with the role and composition of the family, whether in its extended form or in the nuclear grouping more common to Western societies.

FEMINISM
This includes the roles and scope of females in a society, their degree of freedom of choice and expression and what would be considered proper or improper. The idea of unchaperoned females meeting male friends before marriage or the degree of toleration of females in various states of undress in advertisements is not acceptable in Moslem countries.

DEMOGRAPHICS
This indicates the distribution of age, males and females or even social classes in the population. For instance, there is a much higher preponderance of minors in developing countries than in industrialized nations.

Perceived Product Benefits and Usage

This is the demand for a product whether by size, quantity or volume, and also the use of a product; for example, the use of bicycles as either leisure or transportation goods depending upon the country where they are sold. Another instance is the use of pajamas, sleep-wear in Europe but sold as walking-out lightweight leisure clothing in tropical countries like Egypt.

Attitudes
These are existing attitudes to products, whether they are xenophobic towards imported foreign goods or the degree of popularity of certain styles and colors, designs, etc. The attitudes also relate to many other factors in a culture and will be discussed further in a separate analysis.

History

This is the historic background of a country or region which may comprise wars, occupation, colonialism, oppression or alliances and its resultant effect on attitudes and national characteristics. For example, Portugal regards itself as Englands oldest ally and has always been disposed towards trade with the UK because of its fear, until recent times, of its large neighbor, Spain.

Symbols
This is the veneration and respect for, or hostility to, certain symbols and designs, for example stars, crosses, animals, figures, designs (e.g. a mythical animal such as a dragon or design such as a crescent); also, any other items which may have an emotional impact or generate sentimental feelings among the population have to be seriously considered in any form of communication.

Clothing
Although most nationalities nowadays wear Western dress, there are certain occasions and places where the mode of dress indicates status in the community, professional standing, social obligation or a distinct cultural identity. The wearing of robes, uniforms, kilts, turbans, kimonos, dinner jacket and black tie are all examples of dress for both cultural and specific occasions. In all cases the wearer makes a statement about his or her status, profession, occasion, social milieu or position in society.

Customs and Etiquette

This is the folk tradition, such as handshakes, dressing for dinner, kissing a ladys hand or kissing on both cheeks; the giving of gifts or the sending of greetings cards on occasions. The mutual presentation of visiting cards by business partners and the polite preliminaries prior to any round of negotiations are some examples of local customs.

MANNERS
This is the accepted form of correct procedure in social gatherings. When meeting, greeting, eating or attending some other social occasion, such procedures as bowing, standing, use of utensils, etc. can vary and cause offence if the visitor does not come prepared. For instance, it is quite proper and expected in some societies for a guest to belch, after a meal to show appreciation to the host or hostess a procedure which would result in total ostracism in Western society.

SUPERSTITIONS
Although illogical and irrational, such matters as being thirteenth at table or seeing a black cat cross ones path can cause discomfort for some people. Promotions and occasions at which such conditions occur should be avoided even though they may appear ridiculous or unimportant to a stranger in a host country.

ATTITUDE TOWARDS TIME

Societies where the concept of time is money is the norm as against cultures which are more laid back and do not see the need for strict time keeping or time management. Similarly the attitude of business before pleasure, where functional duties are paramount and leisure pursuits only take place after those duties are completed.

Material Orientation
This is the degree of importance that members of a society put upon the ownership of material possessions. The ownership of cars, houses, articles of clothing, etc. is of great importance among members of certain social groups, while other groups may put relatively little value upon the possession of material goods apart from the day-to-day usage of certain products.

Spiritual / Ideological Orientation

This factor is directly opposed to material orientation and emphasizes the importance some cultures place upon mystical and abstract thought, religious or metaphysical contemplation, even superstitious beliefs, all serving to minimize the emphasis on acquisition of possessions. Such orientation could also apply in groups who are highly politically as well as religiously motivated, where the pursuit of goals of power is paramount

Technical Orientation
Cultures can be greatly affected by technology. Where people are accustomed to the use of certain sophisticated manufactured goods, the demand for certain attributes of a product will vary according to the priorities brought about by their use. For instance, the demand for more powerful computers is caused by the need for more economical use of time. Similarly, energy saving preoccupies the Western world as a result of greater use of powerdriven machines. This is in contradiction to some other cultures where manpower is cheap and abundant, resulting in greater labor-intensive product demand. The importance, therefore, of such concepts as maintenance procedures, re-use, repair and recycling of products and the opposing views of the throw-away society are all manifestations of technology superimposed upon a culture.

Thus, in International Marketing, an extra dimension, allowing for culture has to be superimposed upon The Marketing Mix. For example, taking only some cultural factors, the four Ps of the marketing mix can be affected differently by a societys culture.

PRODUCT DESIGN
Whether capital or labor-intensive Acceptable color scheme Aesthetically pleasing to the culture Size of pack

PRODUCT USAGE
Whether seen as luxury or commonplace good Whether seen as restricted for certain groups (e.g. wine for adults only) Whether seen as a leisure or occupational product (e.g. bicycles, heavy-duty boots, etc.)

PRICE
Prevalence of bargaining Attitude towards imported products Expectation of extra benefits (e.g. discounts, guarantee, service, delivery, etc.)

PLACE
Preference of venues (e.g. bazaars, shopping malls, etc.) Facilities for women shoppers (e.g. changing rooms) Acceptance of certain consumers (e.g. children in bars) PROMOTION Display of female body Linguistic confusion in translation Ethnic origin of actors in TV commercials Skepticism or acceptance of the advertisers message

Illustrations of Impact of Culture on Marketing Decisions

Lifestyle

Culture of consumer group or segment

Purchasing behavior

Marketing organization response and planning decisions

Behavior patterns

E.g. Attitudes Time and / or place patterns Conformity Individualism Peer or family group influence Taste and style Response to promotions Deferment to hierarch Corporate policies or directives etc.

Ethics in Accounting
This public watchdog function demands that the accountant maintain total independence from the client at all times and requires complete fidelity to the public trust. Chief Justice Warren Burger (1984) Codes of Professional Conduct AICPA Voluntary professional organization State Boards of Accountancy Licensing Bodies Investigates allegations that a CPA violated the rules Issues sanctions Suspension Revocation

Application of Rules All CPAs Public accounting Private industry Government Education Services Accounting Auditing and assurance services Taxation Advisory services Consulting

Ethical Foundations of Accounting Placing the public interest ahead of ones own self-interest Sixth stage in Kohlbergs model Moral motivation and moral character Integrity

Auditing and Ethics Standards Independence Integrity Objectivity Due Care AICPA Ethics Rules and Interpretations Independence, Integrity and Objectivity Professional Standards and Quality of Work Responsibilities to Clients Other Responsibilities and Practices

Independence Financial relationships Business relationships Family relationships Required for all audit and other attestation services

Impairments to Independence Direct financial interest in the client Material indirect financial interest in the client Loans to or from a client including home mortgage loans

Permitted Loans Automobile loans collateralized by the automobile Loans fully collateralized by cash deposits Credit cards balances of less than $10,000

Family Members Spouse Spousal equivalent Dependents

Close relatives- if they hold a key or financially sensitive position with the client or hold material financial interest Parent Sibling Nondependent child

Non attest Services to an Attest Client Should not perform management functions Should not make management decisions for the attest client May provide advice and recommendations

Interpretation 101-3 Client must agree to perform the following in connection with the nonattest engagement 1. Make or perform all management decisions and functions 2. Designate an individual who has appropriate skills to oversee the services 3. Evaluate the adequacy and results 4. Accept responsibility for the results 5. Establish and maintain internal controls

Sarbanes-Oxley Prohibitions The following may not be performed for attest clients in addition to bookkeeping or other services related to the accounting records or financial statements of the audit client: 1. Financial information systems design and implementation 2. Appraisal or valuation services, fairness opinions, or contribution-in-kind reports 3. Actuarial services 4. Internal audit outsourcing services 5. Management functions or human resources 6. Broker or dealer, investment adviser, or investment banking services 7. Legal services and expert services unrelated to the audit 8. Any other service the BOD determines is impermissible Tax services must be pre approved by the audit committee

The PeopleSoft Case Ernst and Young (EY) violated independence standards EY and PeopleSoft has a symbiotic relationship Engaged in joint sales and marketing efforts

Shared proprietary and confidential business information Partnered to increase sales and boost consulting revenues SEC findings: EY and PeopleSoft had a direct business relationship EY and PeopleSoft shared a mutual interest in success of product EY and PeopleSoft together promoted the product Reasonable investor would conclude that EY identified in fact and in appearance with audit client

Investigations of the Profession Metcalf Committee Cohen Commission House Subcommittee on Oversight and Investigations Savings and Loan Industry Failures Metcalf Committee, 1977-1978 Establish self-regulatory organization of firms with audits of publicly-traded companies AICPA SEC and Private Companies Practice Sections PCAOB supersedes the SEC section Limit types of management services to those directly related to accounting

Cohen Commission Responsibility to detect fraud Expectation gap between the professions goals for the audit and what the public expects from an audit Management should report on its internal controls and the auditor should evaluate managements report Enacted as part of SOX

Importance of Cohen Commission Potential conflict of providing non-attest service for an audit client Decried lowballing of audit fees that raised the possibility of decline in audit quality Lowballing along with opinion shopping lead to commercialization of accounting services

Definitions Lowballing Deliberately underbidding for an audit engagement to obtain the audit client, with hope to secure more lucrative management or consulting services

Opinion Shopping When a client seeks out the views of various accountants until finding one who will go along with the clients desired accounting treatment

House Committee on Oversight and Investigations Failures of ESM Government Securities Continental Illinois National Bank Penn Square Bank ZZZZ Best Co. Should accounting profession be responsible for detection?

Savings and Loan Industry Failures Beverly Hills Savings and Loan, $300 M Sunrise Savings, $250 M Western Savings, $400 M Lincoln Savings and Loan, $3.4 B 1,043 failed thrift institutions, $152.9 B Failure to provide adequate allowances for loan losses Failure to disclose dubious deals between S&Ls and some of its major customers Inadequate internal controls to prevent these occurrences

Internal Accounting Environment National Commission on Fraudulent Financial Reporting, known as the Treadway Committee Committee of Sponsoring Organizations (COSO) Need to change the corporate culture (tone at the top) Establish systems necessary to prevent fraudulent financial reporting

Ethical Responsibilities of Industry CPAs to Avoid Subordinating Judgment Possible material misstatement of financial statements Express concerns to supervisor Bring concerns to higher levels Consider Continued employment Responsibilities to external auditors Responsibilities to outsiders Seek legal advice

Professional Standards and Quality of Work

Professional Competence Due Professional Care Planning and Supervision Sufficient Relevant Data Statements and disclosures are in conformity with GAAP before rendering an opinion

Responsibilities to Clients Confidentiality Contingent Fees

Confidentiality Must have clients permission to divulge confidential information, except in following situations: 1. Validly issued subpoena or summons 2. Necessary information for a peer review 3. Necessary information for ones defense in any investigation initiated by one of the above groups Contingent Fees Prohibition of contingent fees (and commissions) only with respect to attestation clients Prohibition of acceptance of contingent fees when preparing original or amended tax returns or claims for tax refunds

PCAOB and Contingent Fees Prohibits contingent fees in tax engagements performed for an audit client

Other Responsibilities and Practices Commissions Advertising and Solicitation Operating a CPA Practice

Commissions Prohibited commissions to attestation clients Must disclose to the client that a commission is being paid to the CPA May accept or pay referral fees as long as such acceptance or payment is disclosed to the client

Advertising and Solicitation Advertising can not be false, misleading or deceptive Solicitation can not be by use of coercion, over-reaching, or harassing conduct Concern by profession that advertising and solicitation can put commercial interests ahead of the public interest

CPA Practice Sole proprietor Corporation Professional corporation Limited liability partnership Professional limited liability company Firm name can not be misleading Majority of firm must be CPAs

Alternative Practice Structures (APS) Entity that is not majority owned by CPAs may purchase a CPA firm Entity performs the non-attest services while the CPA firm provides atteat services Independence rules extend to direct superiors of the APS and indirect superiors that influence CPAs on audit work

Ethics and Tax Services A tax practitioner need not be independent of a tax client, unless that client is also an audit client A tax practitioner may serve as advocate for the clients tax position, as long a reasonable level of support exists for the position and the CPA was objective in determining supportability of position

Tax Advocacy Positions Potential advocacy position of tax services may compromise credibility, and can risk impairing reputation with respect to independence, integrity, and objectivity

Statements on Standards for Tax Services (SSTS) Duty to assist taxpayers in lawfully minimizing the tax burden Tax positions satisfies the realistic possibility standard Good faith belief tax position is warranted Frivolous position is one knowingly advanced in bad faith Should not adopt a tax position with hope that return will not be audited

Tax Shelters Creation of investments to help wealthy clients avoid taxes 2005 KPMG case Intent to deceive the regulators Fraud

PCAOB Rules Rules to prevent auditors from providing 1. Aggressive tax shelter services to public company audit clients 2. Any other service for a contingent fee 3. Tax services to management who serve in financial reporting oversight roles, or to their immediate family members