ASSIGNMENT ROLE OF CORPORATE SOCIAL RESPONABLITY ETHICS IN

FINANCE

TOWARD THE PARTIAL FULFLIMENT OF INTERNAL ASSESSMENT OF CORPORATE SOCIAL

RESPONSIBILITY AND BUSSINESS ETHICS

Submitted to: Submitted by:

Dr. Kainat siddhiqui Rahul kumar

MBA – 4 sem

(FINANCE)

University roll no -183820

 ROLE OF CORPORATE SOCIAL RESPONABLITY ETHICS IN FINANCE

INTRODUCTION
Finance and accounting are important functions for the management of any firm.
Accounting systems are an essential tool for providing information for decision-
making, as well as for the evaluation of decisions previously made, and the finance
function must seek resources at a reasonable cost and use them efficiently

Finances and accounting are not merely technical tools with no connection with
ethics They cannot work without trust and trust is not possible without ethics Ethics
includes action foreseeable consequences and people, with their virtues or lack of
virtues, involved in any human activity

Ethics in accounting are concerned with how to make good and moral choices in
regard to the preparation, presentation and disclosure of financial information
Finance is concerned broadly with the generation, allocation, and management of
monetary resources for any purpose Ethics in finance consists of the moral norms
that apply to financial activity broadly conceived Finance conducted according to
moral norms is of great importance, not only because of the crucial role that financial
activity plays in the personal, economic

political and social realms but also because of the opportunities for large financial
gains that may tempt people to act unethically

Many of the ethical norms in finance are embodied in laws and government
regulation and enforced by the courts and regulatory bodies Ethics plays a vital role,
however first. by guiding the formation of laws and regulations and second, by
guiding conduct in areas not governed by laws and regulations. The moral norms
that apply to financial activities are diverse and vary to some extent among societies
or cultures

Recently various surveys conducted globally had ranked finance and accounting
professionals very high in terms of professional ethics However various accounting
scandals witnessed during the past few years have put a serious question mark on
the role of the finance and accounting professional in providing the right information
for decision making, both within and outside their respective organisations. In
companies such as Enron. World Com, Tyco, Global Crossing, Adelphia. Quest,
Xerox and most of the late dotcoms, the accounting information used by the Finance
Department was false and manipulative
Principles Related to Ethics in Finance follows

 Principle of Integrity: Integrity means "adherence to moral and ethical

principles Professionals have to adhere religiously to honesty and
straightforwardness while disclosing their representative profession duties
The following acts of responsibility would help professionals comply with
the integrity principles
1) Avoid activities which could affect goodwill of the organisation
2) Refuse to get involved in activities which could adversely affect the
achievement of the organisation objectives
3) Communicate adverse and favourable information with those concerned
4) Avoid conflicts.
5) Refuse favours or gifts which could influence action taken or to be taken

 Principle of Objectivity: According to this principle accounting and

finance professionals should allow bias, personal views, conflicting
interests and undue influence of themselves or others to over business
judgement They should communicate information fairly and objectively in a
transparent manner

 Principle of Confidentiality: The principle requires accounting and

financial professionals to disclosing confidential information related u their
work

 Principle of Professional Competence and Due Care: The financial and

accounting professional need to update their professional skill in the
modern competitive environment

 Principle of Professional Behaviour: The principle requires accounting

and financial professional to comply with relevant laws and regulations and
avoid such action which may result into discrediting the profession
 CSR Ethical Aspects of Financial Management

Unethical activities and financial mismanagement always go together The following

are the major reasons to the increase of unethical financial management.

1)Ambition amongst all the sections of society for disproportionate earnings

2) Coercive and corrupt practices by the government in terms of acts, policy and
procedures

3) The complex arbitrary, time-consuming and one-sided tax laws

4) The power of huge monopolistic organisations

5) The idea of a socialistic pattern of society where intellectual and materialistic

growth is restricted

6)Too much of centralised control and the lack of empowerment .it should be
remembered that power corrupts and absolute power corrupts absolutely

7)Growth is aimed for the sake of growth. The economic aspects of growth are given
more importance than the non-economic aspects like values and ethical principles

8)The social system is deteriorating in major parts of the world

9) The concept of money illusion is prevailing in the minds of all people Money
illusion advocates that for anything and everything, money can be a compensator
 IMPORTANCE OF CSR ETHICS IN FINANCE

Importance of ethics in finance is as follows

1) Maintaining Public Faith: in the wake of the numerous accounting scandals in

the early 2000s.

transparency regarding a company's accounting methods and practices has become

increasingly important to the general public A company that provides a clear
explanation of the accounting methods used to prepare its financial statements
appears to be more ethical and trustworthy than companies that do not provide such
information Often, the more ethical and trustworthy a company appears, the more
likely it is to attract new investor

2 Avoiding Regulatory Investigations and Sanctions: If a company's financial

reports contain suspicious acting methods it can lead to a regulatory investigation
such as a SEBI investigation. If regulatory bodies find any accounting malfeasance
on the part of the company and/or on the part of the accountant they can levy costly
fines on sanctions against the company and the CPA could lose has licence An
example of corporate malfeasance s if the company failed to report all of its earned
income Accounting malfeasance can include actions such as the accountant
knowingly using false information provided by the y or accepting cash or other
incentives outside of his regular pay to prepare the company's financial statements,
in if the accountant knew the company was not reporting all of its income but
prepared the financial statements anyway and accepted cash or other incentives to
do so

3) Avaiding Stock Price Volatility: When companies are accused of, or under
investigation for unethical accounting practices, investors begin selling off their
shares in an attempt to avoid a total loss on the investment. This leads to a decline
in the price per share. However, as some investors are selling their shares, market
speculators and high-risk investors may be purchasing the shares at the lower price,
causing a temporary increase in share price Constant share price volatility can lead
to investor panic and induce a large sell-off of the company's shares, driving the
share price down. If the price per share drops low enough for a long enough time,
the company is delisted from its respective stock exchange its credit rating can go
down and it will have a difficult time obtaining the money it needs to continue
operation Banks and other creditors to which the company owes money may call in
their loans. If the company cannot obtain the funding to pay its creditors, bankruptcy
and corporate collapse could follow