CORPORATE GOVERNANCE

ACTIVITY #3

I. As a professional accountant, why is having the code of ethics as guidance upon the
practice of profession important? (5 pts)
The Code of Ethics provides accountants with a set of rules to help them avoid unethical
actions like fraud and misinterpretation. As a professional accountant, it is important to have a
code of ethics as guidance in the practice of the profession since it will maintain the integrity and
reputation of the profession. Additionally, the Code also acts as a framework for moral decision-
making, helping accountants to make consistent moral decisions and enabling them to address
ethical dilemmas. Furthermore, it will serve as a reminder to accountants to act accordingly and
stay within legal regulations, reducing the risk of legal issues.

II. Pick two ethical principles that incorporate the characteristics and values associated
with ethical behavior and for each principle, give a business scenario wherein it is
practiced. (10 pts)
1. ACCOUNTABILITY- being accountable and accepting responsibility for decisions, for
the foreseeable consequences of actions and inactions, and for setting an example for
others.
Business Scenario:
Cieddan is an accountant for a fast-growing company. The management of the
company understands that in order to reduce the risk of fraud and financial errors,
internal controls must be strengthened as the business grows. Putting strong internal
controls in place inside the financial department is Cieddan's job. Realizing that the
business environment is ever-changing, Cieddan maintains accountability by constant
observation of shifts in the business's operations and the corresponding improvement of
internal controls. She encourages team members to provide feedback in order to support
continuous progress. In this case, Cieddan assumes responsibility for ensuring that the
financial department functions with integrity, accuracy, and transparency. Her proactive
approach to internal controls helps sustain stakeholders' trust as the business grows and
enhances the company's overall financial health.

2. FAIRNESS AND OPENNESS- being fair and openminded, willing to admit errors and,
where appropriate, changing positions and beliefs, and giving equal treatment to
individuals.
 Business Scenario:
Max oversees intense departmental competition for larger budget allocations as
the head accountant of a manufacturing corporation. She gathers comprehensive budget
ideas that specify their requirements and provide arguments for more money. She
establishes an environment of open communication with all department heads, which
promotes fairness and openness in the decision-making process. She creates precise
standards for assessing budget proposals and notifies all departments beforehand in order
to maintain equity. Max leads conversations with every department, encouraging a just
and cooperative method of allocating resources. Her dedication to openness and fairness
strengthens the company's commitment to equitable resource distribution and fosters a
positive corporate culture by fostering departmental trust.

III. Describe the inherent conflict between business ethics and pursuit of profit. (10 pts)
Because companies frequently put profit over ethical considerations, the conflict between
corporate ethics and profit is an important issue. Cost-cutting, moral short cuts, competitive
markets, shareholder value vs. stakeholder welfare, social responsibility, moral decision-making,
financial pressures, long-term sustainability vs. quick profits, regulatory compliance, customer
pressure, and corporate governance are some of the outcomes that may result from this. These
elements may contribute to immoral behaviors including labor exploitation, substandard product
manufacture, or disregarding moral obligations. Financial investments that might hinder short-
term profit maximization may be necessary to balance social responsibility and profit
maximization. Financial demands and ethical dilemmas can also lead organizations to make
unethical decisions, such compromising employee wellbeing or slashing safety standards.
Furthermore, companies would have to make sacrifices in money in order to comply with legal
regulations, which might not be morally right. Businesses need to manage this issue by
establishing a balance between these demands and profit targets. In the end, implementing an
ethical and responsible business model is viewed as an investment in the reputation and long-
term profitability of a company.