Ethical Codes And Code Of Ethics Accounting Essay

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INTRODUCTION

Ethical codes are adopted by organizations to assist members in understanding the difference between 'right' and 'wrong' and in applying that understanding to their decisions. An ethical code generally implies documents at three levels:

Codes of business ethics,

Codes of conduct for employees,

Codes of professional practice.

CODE OF ETHICS

A code of business ethics often focuses on social issues. It may set out general principles about an organization's beliefs on matters such as mission, quality, privacy, or the environment. It may delineate proper procedures to determine whether a violation of the code of ethics has occurred and, if so, what remedies should be imposed. The effectiveness of such codes of ethics depends on the extent to which management supports them with sanctions and rewards. Violations of a private organization's code of ethics usually can subject the violator to the organization's remedies (such as restraint of trade based on moral principles). The code of ethics links to and gives rise to a code of conduct for employees. Basically business ethics deal with the moral beliefs of the owners of the business towards the employees code of ethics (business of ethics) focus on social issue of organization. It focuses on development of business, mission of business, plan of business development; it determines privacy, environment and great plan to deliver business at the top level.

CODE OF CONDUCT

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A code of conduct for employees sets out the procedures to be used in specific ethical situations, such as conflicts of interest or the acceptance of gifts, and delineate the procedures to determine whether a violation of the code of ethics occurred and, if so, what remedies should be imposed.

CODE OF PRACTICE

A code of practice is adopted by a profession or by a governmental or non-governmental organization to regulate that profession. A code of practice may be styled as a code of professional responsibility, which will discuss difficult issues, difficult decisions that will often need to be made, and provide a clear account of what behaviour is considered "ethical" or "correct" or "right" in the circumstances. In a membership context, failure to comply with a code of practice can result in expulsion from the professional organization. In its 2007 International Good Practice Guidance, Defining and Developing an Effective Code of Conduct for Organizations, the International Federation of Accountants [1] provided the following working definition: "Principles, values, standards, or rules of behavior that guide the decisions, procedures and systems of an organization in a way that (a) contributes to the welfare of its key stakeholders, and (b) respects the rights of all constituents affected by its operations."

Ethical codes are often adopted by management, not to promote a particular moral theory, but rather because they are seen as pragmatic necessities for running an organization in a complex society in which moral concepts play an important part. They are distinct from moral codes that may apply to the culture, education, and religion of a whole society.

Often, acts that violate ethical codes may also violate a law or regulation and can be punishable at law or by government agency remedies. Even organizations and communities that may be considered criminal in nature may have ethical codes of conduct, official or unofficial. Examples could include hacker communities, bands of thieves, and street gangs.

Origin of Business Ethics

When we trace the origin of business ethics we start with a period where profit maximisation was seen as the only purpose of existence for a business. There was no consideration whatsoever for non-economic values, be it the people who worked with organisations or the society that allowed the business to flourish. It was only in late 1980's and 1990's that both intelligentsia and the academics as well as the corporate began to show interest in the same.

Nowadays almost all organisations lay due emphasis on their responsibilities towards the society and the nature and they call it by different names like corporate social responsibility, corporate governance or social responsibility charter. In India Maruti Suzuki, for example, owned the responsibility of maintain a large number of parks and ensuring greenery. Hindustan unilever, similarly started the e-shakti initiative for women in rural villages.

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Globally also many corporations have bred philanthropists who have contributed compassion, love for poor and unprivileged. Bill gates of Microsoft and Warren Buffet of Berkshire Hathaway are known for their philanthropic contributions across globe.

Many organisations, for example, IBM as part of their corporate social responsibility have taken up the initiative of going green, towards contributing to environmental protection. It is not that business did not function before the advent of business ethics; but there is a regulation of kinds now that ensures business and organisations contribute to the society and its well being.

Nowadays business ethics determines the fundamental purpose of existence of a company in many organisations. There is an ensuing battle between various groups, for example between those who consider profit or share holder wealth maximisation as the main aim of the company and those who consider value creation as main purpose of the organisation.

In addition ethics is important because of the following:

Satisfying Basic Human Needs: Being fair, honest and ethical is one the basic human needs. Every employee desires to be such himself and to work for an organization that is fair and ethical in its practices.

Creating Credibility: An organization that is believed to be driven by moral values is respected in the society even by those who may have no information about the working and the businesses or an organization. Infosys, for example is perceived as an organization for good corporate governance and social responsibility initiatives. This perception is held far and wide even by those who do not even know what business the organization is into.

Uniting People and Leadership: An organization driven by values is revered by its employees also. They are the common thread that brings the employees and the decision makers on a common platform. This goes a long way in aligning behaviours within the organization towards achievement of one common goal or mission.

Improving Decision Making: A man's destiny is the sums total of all the decisions that he/she takes in course of his life. The same holds true for organizations. Decisions are driven by values. For example an organization that does not value competition will be fierce in its operations aiming to wipe out its competitors and establish a monopoly in the market.

Long Term Gains: Organizations guided by ethics and values are profitable in the long run, though in the short run they may seem to lose money. Tata group, one of the largest business conglomerates in India was seen on the verge of decline at the beginning of 1990's, which soon turned out to be otherwise. The same company's Tata NANO car was predicted as a failure, and failed to do well but the same is picking up fast now.

Securing the Society: Often ethics succeeds law in safeguarding the society. The law machinery is often found acting as a mute spectator, unable to save the society and the environment. Technology, for example is growing at such a fast pace that the by the time law comes up with a regulation we have a newer technology with new threats replacing the older one. Lawyers and public interest litigations may not help a great deal but ethics can.

HOW INFOSYS COMPANY DRAWS AND MAINTAIN ITS CODE OF ETHICS?

The code of conduct and ethics help to maintain the business code of conduct of Infosys Technology Limited together with its subsidiaries including the :

1. Rule 5610 of the nasdaq global select market.

2. Clause 49 of the listing agreement entered into the national stock exchange of India and Bombay stock exchange.

3. section 406 of the u.s. securities.

This code can promote the other things like:

Accountability for the adherence of the code.

Accurate understandable, full, fair and timely disclosure in reports

The internal reporting of the violations of the code.

The conflict of interest between personal and professional relationships.

Compliance with rules and regulations.

All directors, trainees, employees and officers are expected to understand and read the code of conduct, comely with the rules and regulations, up-hold the standard in day to day activities and ensure that the consultants, contractors of the third parties are working on the behalf of the company and are adhere of the standards.

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This code is in nature are general due to its principle described. The situation that may arise does not cover in the code. To apply this code one have to use common sense and good judgement where the specific instructions are posted at different locations you should also check whether the company had in policy, procedures and employees handbook being adopted.

To confirm employment and company policy and procedures shall not construct of employment and shall constitute communication related for the definite term or a guaranteed confirmation. The codes, policies, procedures, instruction, practices and rules or verbal written representation are all the speredes code for the extent that they are inconsistent.

For the reviewing and updating its policy and procedures its committed to company subject to law its application only when company has reserves the right to amend and have the alter to terminate the code any time.