The importance of audit independence can be categorized into four reasons: Firstly, audit independence can hold the public confidence and avoid interest conflicts; Secondly, audit independence can help auditors to provide high quality financial report and avoid scandals like ‘Enron bomb’; Thirdly, the development of no-audit services make it more difficult but more important to maintain audit independence; Lastly, audit independence can improve the quality of audit and it can assist managers to make strategy formulations. Stakeholders make economic decisions by taking advantage of financial reports. Whether those reports are related and reliable are questions. Audit can help to solve this problem. However, auditor fails to fulfill the duty if they cannot remain independence in the conducting process. On one hand, report users will doubt this kind of dependence if they thought auditor and consigner belong to the same party. On the other hand, when auditor cannot keep an unbiased Continue reading
Business Ethics
Business ethics (also known as corporate ethics) is a form of applied ethics or professional ethics that examines ethical principles and moral or ethical problems that arise in a business environment. It applies to all aspects of business conduct and is relevant to the conduct of individuals and business organizations as a whole. Business ethics can be both a normative and a descriptive discipline. As a corporate practice and a career specialization, the field is primarily normative. In academia descriptive approaches are also taken. The range and quantity of business ethical issues reflects the degree to which business is perceived to be at odds with non-economic social values.
Importance of Ethical Climate in Business
A strong ethical climate is a system of informal rules concerning the stakeholders’ behavior in internal or external environments. In such an environment, organizational leaders take the initiative to shape or support the ethical environment. Ethical climate corresponds to organizational personality, which has a direct impact on both organizational success and employee satisfaction. Ethical climate represents common values and beliefs that hold an organization intact. Given that employee and customer dissatisfaction are some of the causes of turnover and loss of trust respectively, leaders at all levels of an entity must be aware of their predefined roles and responsibilities in preserving an ethical workplace setting that can improve both customer experience and employee satisfaction. While most managers or organizational leaders recognize the significance of ethical climate in customer and employee satisfaction, some fail to realize the direct impact they have is shaping it. Therefore, shaping ethical climate is one of Continue reading
Relevance of Ethics in the Age of Technology
Unprecedented in its speed and scope, scientific and technological progress is one of the most obvious realities of the modern time. Technology enormously increases the productivity of social labor, expanding the scale of production. It has achieved incomparable results in mastering the forces of nature. Moreover, technology has become the basis of the complex mechanism of the modern development. A country that fails to provide a sufficiently high rate of scientific and technological progress and incorporate its results in various areas of public life is condemned to be a underdeveloped and dependent state with a subordinate position in the world. In the recent past, it was common to praise the scientific and technological progress wildly as the sole source of the overall progress of the humankind. It is the view of the scientism, especially the natural sciences, as a superior and absolute social value. However, the rapid development of science Continue reading
Importance of Business Ethics in Organizations
Business ethics is a compilation of the moral values and conduct standards that govern the decisions and actions in the workplace. Business ethics defines social responsibility and the balance between profitability and righteousness. On the other hand, morality is the conduct principles that govern a group or an individual, for instance, accounting ethics or personal ethics. Business ethics principles prepare and encourage managers of the organizations to articulate individual moral responsibilities, the responsibility of their profession, as well as their company’s. It also aims at bringing out the attention and the process of making moral decisions on external events. Ethical reasoning enables stakeholders to determine what is fair, good, and equitable for those who get affected or affect business decisions. Principles of business ethics can be applied to examine personal motivation so as to resolve an ethical dilemma. The principles include the rights principle, justice principle, relativism, utilitarianism, universalism, and Continue reading
Socially Responsible Strategies
A question of central interest here is, how can corporations formulate socially responsible strategies? How can companies assure that corporate domain choice strategies and competitive strategies are responsive to social needs and do not harm the public interest? There are two basic approaches to dealing with these questions. First is to evaluate the social merits of each corporate and business strategy selected based on financial, technological, and market criteria. For each strategy, one could ask these questions: What social good does the strategy contribute? Does the strategy create any public risks or harm? Does the strategy harm the interests of our stakeholders? How does the strategy affect public image and goodwill? Will the strategy lead us into social controversies? The answers to these questions can aid in modifying strategies to fit reasonable demands. The idea is not to abandon strategies that have even the slightest negative consequences, but to consider Continue reading
The Importance of Corporate Governance in Business
Corporate Governance can be defined as the organizational structure of a company. It encompasses the overall processes, operations and policies by which a company is controlled and functions. Corporate governance is most often viewed as both the structure and the relationships which determine corporate direction and performance. Within the governing body of a corporation there are various stakeholders. Stakeholders are individuals which are of great importance to the company because they contribute directly or indirectly to its economic activity. Stakeholders retain different degrees of importance within an organization depending on their title or function which are some of the following: shareholders, the board of directors, employees, customers, creditors and suppliers. All together this group of individuals defines a corporate community in which day to day business is conducted and must be sustained in order for the company to survive. Similar to any other community, where there are conflicts of interests, Continue reading