Ethics Officers n Cfo

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ETHICS OFFICERS AND CFO

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CONT

In the wake of numerous corporate scandals

between 2001-04, even small and medium-sized

companies have begun to appoint ethics officers.

They often report to the Chief Executive Officer and

are responsible for assessing the ethical

implications of the company's activities, making

recommendations regarding the company's ethical

policies, and disseminating information to

employees. They are particularly interested in uncovering or

preventing unethical and illegal actions.3


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CONT

An ethics officer is someone who aligns the

practices of a workplace with the stated ethics and

beliefs of that workplace, holding people

accountable to ethical standards.

Ethics officers are an increasingly common sight in

the business community, and they can also be

found at colleges and universities, where ethical

conduct is often an issue of grave concern for

students and staff. Special qualifications are not required to act as an

ethics officer, although people in this position

generally tend to have excellent ethics. 5


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CONT

Ethics officers perform a number of important tasks.

They can help their employers develop codes of ethics

so that a clear standard is created, and they also

establish clear consequences for violations of these

codes, so that everyone at a company understands thathe or she will be held ethically accountable.

Ethics officers may also enforce ethical codes, and

make adjustments to the code as needed.

One of the roles of an ethics officer is to examine thestated values, mission, and goals of an organization and

to determine whether or not the organization's behavior

actually supports these statements.6


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CONT

A company which claims to behave ethically may

use an ethics officer as a symbol of accountability.

Ethics officers can also be part of the ethical review

boards which review proposed experiments in the

research environment or consider other proposed

activities which may have ethical implications.

In their role as compliance officers, ethics officers

keep an eye on all activities at an organization.

The ethics officer may also be empowered to

undertake investigations into specific employees or

activities to confirm that they conform with the

company's ethical guidelines. 7


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SKILLSREQUIREDBYETHICSOFFICER

An ethics officer is responsible for developing and

enforcing ethical policies within an organization. To

do this job successfully, skills such as:

1. Honesty

2. Fairness

3. Objectivity

4. Professionalism

5. The ability to keep a clear head during times of crisis

are all important skills for an ethics officer to have.6. In addition to these skills, specific training in ethics,

cultural customs and decision-making skills might be

helpful.8


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RESPONSIBILITIES

Identifying the corporate values of the company,incorporating those into a code of ethics

Developing and distributing a code of conduct

Managing ethics and legal compliance program

Assessing the needs and risks of organization wideethics program.

Creating training programs to familiarize employeeswith the company's ethical goals and guiding

employees in making the right decisions whereethics are concerned.

Conducting training program.

Cofidentential service to answer employees9


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Investigating reports of unethical activity and taking

actions for violation

Creating a system for the reporting of ethical

breaches

Making periodic reports to top executives on the

state of corporate ethical affairs

EO is the key person in your installation of an ethics

culture. This means installing the ethics culture in

employees and management personnel.

Once the culture is installed, the EO does the

preventive maintenance and constant improvement

and monitoring of the system.10


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WHYHAVEAN EO?

The multiplication of regulations and regulatoryauthorities, with which companies now have to deal

The increasingly difficult legal environment placescompanies in a situation fraught with the risk of badpublicity, heavy fines, and maybe even criminalsanctions

Many governmental regulatory bodies or governmentcontracts require the business to have an ethicsprogram with a corporate person of "high managementposition" overseeing the ethics program

A company which claims to behave ethically may use anethics officer as a symbol of accountability, showing thatit does not just pay lip service to the ideal of ethics, butactually has an ethics code in force and appoints peopleto enforce it.

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PROSOFHAVINGANEO

Increases investor confidence in the company

Promotes an ethical culture

Can act as an advisor to employees on ethical dilemmas

Ensures that decisions made by the company are ethical, andprevents potentially damaging decisions

Provides a vehicle for dealing with stakeholder concerns

Provides better protection to shareholders and otherstakeholders

Can identify problems and fix them

Ensures compliance with increasingly complex regulations

Ethical focus may be competitive advantage for the company12


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CONSOFHAVINGANEO

Additional cost to shareholders

EO may not be taken seriously by Senior

Management

Potential conflict of interest (salary & bonuses)

May lead to decisions that do not maximize

shareholder wealth

Could lead to worse behavior if ethical responsibilityis outsourced to the CEO

May create oppressive culture within the company13


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CODEOFETHICS

A code of ethics will start by setting out the values thathighlight the code and will describe a company'sobligation to its stakeholders.

The code is publicly available and addressed to anyonewith an interest in the company's activities and the way itdoes business.

It will include details of how the company plans toimplement its values and vision, as well as guidance tostaff on ethical standards and how to achieve them.

A code of conduct is generally addressed to andintended for employees alone.

It usually sets out restrictions on behavior, and will be farmore compliance or rules focused than value orprinciple focused. 14


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ADOPTIONOF EOS


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CHIEF FINANCIAL OFFICER

The Chief Financial Officer (CFO) of a company orpublic agency is the corporate officer primarilyresponsible for managing the financial risks of thebusiness or agency.

This officer is also responsible for financial planning andrecord-keeping, as well as financial reporting to highermanagement.

In recent years, however, the role has expanded toencompass communicating financial performance andforecasts to the analyst community.

The title is equivalent to finance director, commonlyseen in the United Kingdom. The CFO typically reportsto the Chief Executive Officer, and is frequently amember of the Board of directors. 16


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CFOAND ETHICS

The collapses of Enron, Worldcom, Arthur Andersen, the

Arms deal controversy, the Shabhir Shaik and Jackie

Selebi trials and other cases of fraud and corruption

have brought ethics to the front burner.

The scandals of the 2000s have left the accountingprofession not only with egg on its face, but dented its

reputation as an independent provider of informed

opinion on the state of corporate finances.

Financial practitioners must have the passion for cleangovernance, an uncompromising approach to ethics,

and an absolute pride in sustaining and enhancing the

reputation and trust that they have built over the

decades.17


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CONT

The rise of the profession in recent years has

enabled CFOs to do far more than tend to finances

and financial reporting.

Increasingly, CFOs have a hand in a companys

strategic direction and provide a representative face

to investors and the media.

CFOs are the guardians of company controls and,

often, a partner to the chief executive and member

of the board.

This dual part of steward and strategist accords the

position a unique role in disseminating ideas and

attitudes on ethical practice throughout the firm. 18


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THE CHANGED ROLE OF CFO

The traditional role of the CFO has changed toincorporate a multi-faceted individual who is well-rounded to drive every aspect of the business not justthe finances

The post-Enron and Worldcom world has created theneed for the Finance function to focus more of itsattention on the wider issues relating to enterprise riskmanagement (ERM), and so there has been a shift inthe focus of accountants and CFOs

In terms of ERM, risk and strategy need to be aligned.This means that once strategy choices are made, therisk responses must be identified, accountabilitiesassigned, and implementations monitored.

Thus ERM is integral to strategic planning andperformance assessment

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oA key challenge for the CFO of today isperformance management

o The CFO needs to ensure growth and improvedproductivity of the entire organization

o Accordingly, performance targets and standardsneed to be set to measure productivity

o Further, creativity and innovativeness needs to be

at the heart of everything we do as accountants andCFOs

o In terms of sustainability the environment is also aconcern. We need to look at the triple bottom line 20


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CFO & ETHICAL DECISIONS

The role of the CFO has become much more diversified.The CFO is no longer just a number cruncher. New rolesand responsibilities include SCM, risk, VFM (Value forMoney), and performance management

In addition, the intense pressures of business may notalways allow the CFO the luxury of much time forreflection, and the high stakes may tempt the CFO tocompromise on compliance issues

Irregular expenditure in terms of non-compliance with

SCM regulations is a key issue facing CFOs right now

CFOs often face difficult ethical dilemmas, for example,housing standards and the financial viability andsustainability of same 21


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CFOSCODEOFETHICS

Embody and enforce the Code of Ethics.

Ensure that this Code of Ethics is communicated at leastannually throughout all financial departments.

Formally and promptly communicate any breach of thisCode of Ethics to the Senior Vice President and General

Counsel.Act at all times with honesty, integrity and

independence, avoiding actual or apparent conflicts ofinterest in personal and professional relationships.

Discuss with the appropriate Senior Management level,

or, in the case of the Chief Executive Officer, with theSenior Vice President and General Counsel, in advanceany transaction that reasonably could be expected togive rise to a conflict of interest.

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Provide full, fair, accurate, complete, objective,

timely and understandable financial disclosures in

internal reports as well as documents filed or

submitted as public communications.

Comply with all applicable rules and regulations of

central, state, provincial and local governments, the

SEBI, the stock exchanges on which the

Company's stock is listed, and other appropriate

private and public regulatory agencies. Comply with the Company's policies and

procedures.23


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CONT

Act in good faith, responsibly, with due care,

competence, diligence, and without knowingly

misrepresenting material facts or allowing my better

judgment to be subordinated.

Protect and respect the confidentiality of informationacquired in the course of my work except when

authorized or otherwise legally obligated to disclose.

Confidential information acquired in the course of my

work will not be used for personal advantage.

Be recognized as a responsible partner among peers.

Responsibly use and control assets and other resources

employed or entrusted to my supervision.24


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CONCLUSION

The effectiveness of ethics officers in the marketplace is

not clear.

If the appointment is made primarily as a reaction to

legislative requirements, one might expect the efficacy

to be minimal, at least, over the short term. In part, this is because ethical business practices result

from a corporate culture that consistently places value

on ethical behavior, a culture and climate that usually

emanates from the top of the organization.

The mere establishment of a position to oversee ethics

will most likely be insufficient to inculcate ethical

behaviour: a more systemic programme with consistent

support from general management will be necessary. 25


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Ethics Officers n Cfo

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