Academic journal article Journal of Accountancy

Ethics, Reputation, and Compliance Gain as Corporate Priorities

Academic journal article Journal of Accountancy

Ethics, Reputation, and Compliance Gain as Corporate Priorities

Article excerpt

Businesses are placing increasing emphasis on ethics and compliance, and the area is set to gain further importance in the near future.

The demand for greater transparency from consumers and stakeholders across the world has pushed the areas of ethics and compliance up the corporate list of priorities in recent years. In addition, the risk to reputation and potential damage that can be done if evidence of unethical practice is discovered have increased significantly with the advent of social media.

A survey of 1,699 CGMA designation holders in 99 countries provides insight into the status of ethics in the workplace. Here are some of the key findings:

* Fifty-one percent of respondents said ethical performance is a bigger focus for senior management in their company than it was three years ago, and 55% believe its importance will grow further in the next three years.

* Seventy-six percent of CGMA designation holders stated that their employers value or highly value their commitment to a code of ethics.

* Safeguarding reputation is the primary motivation when companies seek to establish and embed ethical standards. Among those polled, 80% cited the reputational views of stakeholders (customers, investors, and employees) as one of the main drivers behind their decision. Regulatory or legal compliance was one of the three most important factors for 73% of respondents, and brand image for 47%.

* Ten percent said financial return was a driver of ethical performance, perhaps because some consumers are willing to pay more for products from companies they see as generating a positive social and environmental impact.

* In practice, the most common means of embedding an ethical culture is by simply "conforming to regulations" (78%). Ethical issues were given priority by the leadership of 76% of respondents' companies, and 63% said their organizations created an environment that promoted and instilled confidence and trust.

* Many of the companies represented in the poll have yet to explain their codes of ethics effectively or provide staff with the training required to implement those policies. …

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