Ethics and the Conduct of Business Eighth edition Chapter 13 Governance, Accountability, and Compliance Copyright © 2017, 2012, 2009 Pearson Education, Inc All Rights Reserved Modules • 13.1: Corporate Governance • 13.2: Corporate Accountability • 13.3: Corporate Compliance • Conclusion: Governance, Accountability, and Compliance Copyright © 2017, 2012, 2009 Pearson Education, Inc All Rights Reserved Learning Objectives • 13.1: Identify the moral arguments and legal rules for shareholders’ control of publicly held corporations, and the additional considerations for protecting the interests of other stakeholders • 13.2: Critique how financial reporting, corporate management roles, and the law function to prevent fraud and other kinds of corporate misconduct, and the flaws in the system that have allowed major scandals • 13.3: Evaluate the components of corporate ethics programs, the federal guidelines designed to punish and prevent misconduct, and how adopting a code of ethics benefits companies Copyright © 2017, 2012, 2009 Pearson Education, Inc All Rights Reserved Introduction: Governance, Accountability, and Compliance • Fraud at WorldCom • Creative accounting • Unraveling of the scheme Points to consider Copyright â 2017, 2012, 2009 Pearson Education, Inc All Rights Reserved 13.1: Corporate Governance (1 of 2) Objective: Identify the moral arguments and legal rules for shareholders’ control of publicly held corporations, and the additional considerations for protecting the interests of other stakeholders 13.1.1: Shareholder Control Overview Justifying control Public policy Incentives The market 13.1.2: The Shareholders' Contract Residual risk bearer Solutions Copyright © 2017, 2012, 2009 Pearson Education, Inc All Rights Reserved 13.1: Corporate Governance (2 of 2) Objective: Identify the moral arguments and legal rules for shareholders’ control of publicly held corporations, and the additional considerations for protecting the interests of other stakeholders 13.1.3: Shareholders and Stakeholders Overview Stakeholder theory Protecting stakeholders Return to stakeholders Copyright © 2017, 2012, 2009 Pearson Education, Inc All Rights Reserved Figure 13.1: Measures for Corporation Accountability Copyright © 2017, 2012, 2009 Pearson Education, Inc All Rights Reserved 13.2: Corporate Accountability (1 of 2) Objective: Critique how financial reporting, corporate management roles, and the law function to prevent fraud and other kinds of corporate misconduct, and the flaws in the system that have allowed major scandals 13.2.1: Financial Reporting Overview Accounting and auditing Job pressure Conflict of interest Confidentiality and expectations gap Copyright © 2017, 2012, 2009 Pearson Education, Inc All Rights Reserved 13.2: Corporate Accountability (2 of 2) Objective: Critique how financial reporting, corporate management roles, and the law function to prevent fraud and other kinds of corporate misconduct, and the flaws in the system that have allowed major scandals 13.2.2: Executives and Directors Role of CEO Role of directors 13.2.3: Criminal Prosecution Overview Theoretical problems Practical problems Copyright © 2017, 2012, 2009 Pearson Education, Inc All Rights Reserved 13.3: Corporate Compliance (1 of 3) Objective: Evaluate the components of corporate ethics programs, the federal guidelines designed to punish and prevent misconduct, and how adopting a code of ethics benefits companies 13.3.1: Program Components Overview Components Integrity strategy 13.3.2: Program Benefits Main benefit Other benefits Copyright © 2017, 2012, 2009 Pearson Education, Inc All Rights Reserved 13.3: Corporate Compliance (2 of 3) Objective: Evaluate the components of corporate ethics programs, the federal guidelines designed to punish and prevent misconduct, and how adopting a code of ethics benefits companies 13.3.3: Federal Sentencing Guidelines Overview How guidelines work Effective ethics programs Copyright © 2017, 2012, 2009 Pearson Education, Inc All Rights Reserved Table 13.1: Determining a Culpability Score Points added to + points if high-level personnel were involved in the wrongdoing Points subtracted from – to points for: • reporting an offense + points if the organization obstructed the investigation or prosecution of the crime • cooperating with the investigation + points if similar misconduct had occurred before • accepting full responsibility Copyright © 2017, 2012, 2009 Pearson Education, Inc All Rights Reserved 13.3: Corporate Compliance (3 of 3) Objective: Evaluate the components of corporate ethics programs, the federal guidelines designed to punish and prevent misconduct, and how adopting a code of ethics benefits companies 13.3.4: Codes of Ethics Overview Types of codes Reasons for adoption Copyright © 2017, 2012, 2009 Pearson Education, Inc All Rights Reserved Conclusion: Governance, Accountability, and Compliance • Corporations should be legally structured • Corporations must be held accountable • There must be a control environment within the corporation Copyright © 2017, 2012, 2009 Pearson Education, Inc All Rights Reserved ... allowed major scandals • 13. 3: Evaluate the components of corporate ethics programs, the federal guidelines designed to punish and prevent misconduct, and how adopting a code of ethics benefits... stakeholders • 13. 2: Critique how financial reporting, corporate management roles, and the law function to prevent fraud and other kinds of corporate misconduct, and the flaws in the system that... Accountability (1 of 2) Objective: Critique how financial reporting, corporate management roles, and the law function to prevent fraud and other kinds of corporate misconduct, and the flaws in the system