World Congress of Accountants Istanbul The Professional Accountant in Business and Corporate Ethical

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World Congress of AccountantsIstanbul The
Professional Accountant in Business and Corporate
Ethical BehaviorTheme of the workshop The tone
from the top The power of the word Wim
MoleveldProfessor of Accountancy, Nyenrode
Business University, Netherlands
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Content of the presentation

• The power of the word
• Literature and research
• - Relevant Publications of IFAC - Survey 1999
  some observations and comments
• - Ethics and Codes words, words, words
• - The effects
• A case study
• The tone from the top

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The tone from the topdemonstrated by a
published code of corporate ethics,
communicating values, criteria for
decision-making and behavior

• A code is expected to contribute to the three
  basic concept of good governance, being
• accountability
• adequate checks and balances, and
• transparency
• A code creates the responsibility of management
  and the organization to comply to its values
• That is
• The power of the word

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Relevant Publications of IFAC

• Code of Ethics for Professional Accountants
  (2005, effective June 30, 2006)
• International Education Standard 4 Professional
  Ethics, Values and Attitudes (effective 2005)
• ED International Education Practice Statement
  Approaches to Developing and Maintaining
  Professional Values, Ethics and Attitudes (2006)
• Publications of Professional Accountants in
  Business Committee of IFAC
• Codifying Power and Control Ethical Codes in
  Action (survey published in 1999)
• ED Defining and developing an effective Code of
  Conduct (expected 2006)

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Codifying Power and Control Ethical Codes in
Action (survey published in 1999)

• Some observations and comments
• Many corporations have established a corporate
  code of ethics and conduct
• Corporate values are defined in general and
  abstract words
• The effects are not measured in the survey
• The survey was directed to corporations and did
  not include not-for-profit organizations

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Ethics and Codes words, words, wordsethics,
values, attitudes, behavior, conduct,
andintegrity, openness, honesty, fairness,
competence, professionalism, accountability,
respect, teamwork, responsibility, flexibility,
enthusiasm, ethical awareness, doing your
bestetc etc etc Source Codifying Power and
Control, Ethical Codes in Action
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Terminology Ethics A system of moral
principles, by which human actions may be
judged Values This is what the company
stands forChoices (or Practice) This is how we
do things around hereBehavior (or Conduct)
This is what you must or must not do
Source Codifying Power and Control Ethical
Codes in Action
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ValuesIntegrity is the keyword acting with
integrity is the same as acting
ethicallySource Competing with integrity in
international business, De George, R. New
York,1993
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Corporate ValuesIntegrity is identified with
the qualities of honesty, reliability, and fair
dealing. In its broader sensecoherent
integration of identity and responsibilitySource
Cases in leadership, ethics, and organizational
integrity. A strategic perspective. Paine, L.
Boston, 1997
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Integrity We are open, honest and trustworthy
in dealing with customers, suppliers,
contractors, representatives, co-workers,
shareholders and the communities we
affect.Source ED Defining and developing an
effective Code of Conduct
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The effects Integrity or Integritism ?

• Research found that integrity strategy may cause
  accumulation of rules, controls and supervision,
  making governance ineffective
• Time for a time out? Compliance to rules or
  inspiring to taking responsibilities?
• New vision on enhancing of integrity by debate
  and discussion with stakeholders and
  experimentation with stimulating measures
• This new vision requires transparency on
  Companys integrity strategy and related
  procedures, and requires openness on dilemmas
  encountered and decisions taken

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The case study

• Objective Identify lessons to be learned from an
  organization in a not-for-profit sector that has
  longstanding experience with the phenomena of a
  code of ethics and conduct
• Methodology Questionnaire as used for the IFAC
  survey applied at a local Dutch hospital and
  review of relevant documentation and evidence.
  Findings confirmed by interviews and review of
  websites of some other hospitals
• Subject Dutch hospital Diaconessenhuis Leiden
  founded by Christian churches in the region,
  still forming part of the constituency. Size
  staff 1200, including 70 medical specialists in
  various disciplines 300 beds.
•  

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Diaconessenhuis Leiden, The Netherlands
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Diaconessenhuis Leiden, The Netherlands
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Major findings

• Relevant professional values and desired conduct
  are defined in legislation and in detailed
  professional regulation. Many technical
  decisions in practice are prescribed in so-called
  protocols.
• Corporate values are not communicated explicitly.
  This view seems to be shared by other hospitals.
  However, specific positioning is considered
  necessary when the organization is in trouble.
• Specific choices for practice and the related
  behavior have been expressed explicitly and
  communicated, both internally and externally.
• The specific choice made by the hospital is its
  holistic view on cure and care. Keywords in
  desired behavior are approach of
  understanding, attention and respectful treatment
  of the patient.

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Major findings (continued)

• Management stimulates the desired culture of
  transparency towards the patient and the public
  at large and openness within the organization by
  
• Published guidelines for specific actions
  requiring professional judgment
• Published guidelines for filing and handling of
  complaints
• Measures stimulating that members of the staff
  report voluntary all errors made and accidents
  occurred
• Regular meetings arranged to discuss subjects
  relating to values, practice and behavior.
• A committee within the internal organization
  advices on actions in case of medical ethics

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The tone from the top

• The major lesson from the case study may be
  managements strive to enhance integrity and
  quality by promoting a culture of transparency
  towards the public and openness within the
  organization by concrete measures and by its own
  behavior.

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QuestionIs transparency and openness really
possible in corporate practice considering the
possible consequences?