Accounting Theory - Analysis of the Concepts of Business Culture

Running head: ACCOUNTING THEORY
Accounting Theory
Name of the Student
Name of the University
Author Note

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Executive Summary
This report contains an analysis of the concepts of Business Culture and the importance of
ethical practices in a business. It begins with an introduction and purpose of the report. The
report then proceeds towards the Discussion and Analysis. In this section, concepts like Business
Culture, Ethics in business and Ethical branding are all discussed. Recommendations are
provided for the manner in which a business can implement a sound business culture in the entire
organisation. The report concludes with an overview of the concepts discussed and the manner in
which an entity can become reputed for conducting business ethically.

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Table of Contents
Introduction and Purpose.............................................................................................................3
Discussion and Analysis..................................................................................................................3
Business Culture and Ethics.........................................................................................................3
Issues related to the current business culture...............................................................................4
Importance of Ethics....................................................................................................................5
Ethical Branding..........................................................................................................................6
Steps to implement efficient business culture..............................................................................7
Conclusion...................................................................................................................................7
References....................................................................................................................................9

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Introduction and Purpose
The main purpose of this report is to provide an understanding about the various aspects
of business culture and ethics to the Board of Commonwealth Bank of Australia. This is done
with the help of a recent article which establishes a link between the recent ball tampering
incident in Australian Cricket and the findings of the Royal Commission into the activities of
business entities. The insight into the manner in which the ethics and business culture can be
improved by the organisation is provided through the help of journals and articles published
previously. One of the most common aspects between the ball tampering incident and the
misdoings found out by the Royal Commission is the mentality of both the entities. Their main
motive was to win at all costs irrespective of the other important factors like the reputation of the
organisation getting tampered. Hence, the majority of the report focuses on this similarity in
mentality and how it affects the reputation of the entities. Further focus is levied on identifying
the underlying faults within this approach and on providing suggestions to improve this culture
by the organisation. It can be said that the role of the employees hired by an organisation in
implementing its framework is often overlooked by the researchers and committees in analysing
a misdoing in an entity. Additional emphasis should be laid on the manner in which employees
conduct themselves as a part of the business and the responsibility that they have towards the
betterment of the organisation as a whole. Hence, the importance of ethics and a healthy business
culture is discussed and a conclusion is provided on the basis of the same.
Discussion and Analysis
Business Culture and Ethics
One of the most common similarities between the Royal Commission’s observations
related to the misdoings by the Commonwealth Bank and the misdoings of the Australian Cricket

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team is the breakdown in the culture of the entire entity. The observations of Commissioner
Hayne in his Royal Commission report suggest that most of the steps taken by the
Commonwealth bank were in relation to the improvement of the remuneration practices and
policies. This resulted in the employees taking steps which were not beneficial to the
organisation and only focussed on getting better payments. Similarly, the Australian cricketers
also took steps which were focused primarily on winning the game of cricket and not concerned
about the ethical and cultural implications of the steps taken by them. These incidents brought
significant disrepute to the organisations which the people were representing. The reason for
these steps were an excessive focus on the tangible aspects like winning and earning huge
amounts of profits. As pointed out by the Royal Commission, an excessive focus on achieving
the goal makes the manner of pursuing the goal irrelevant after a certain point of time. Due to the
subjective nature of ethics and corporate culture, it is imperative to understand that an
organisation may find it difficult to implement the practices in a single instance in an
organisation. It is primarily essential to understand the importance of these aspects in an
organisation.
Issues related to the current business culture
As suggested by the report of the Royal Commission, the increased importance to profit
making has resulted in the issues arising about the business culture of the organisation. The
recommendations suggested by the Royal Commission are related to the policies implemented by
the organisations in the industry like the prudential policy and the competition policy (Davis,
2019, p. 210). Some other areas where the business practices have resulted in enhancing the
negative reputation of the entity are the business practices like the remuneration provided to the
mortgage brokers. The excessive remuneration provided to them resulted in increasing their

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focus on closing the mortgage deals in a quick manner and ignore the responsibilities of
thoroughly analysing the documents before the conclusion of a deal. Deficiencies also exist in
the organisational internal controls of the organisation. This resulted in the arising of incidents
related to conflicts of interest and misconduct on the part of the employees. The lack of strict
imposition of penalties for any misdoing on the part of the employees has also resulted in the
employees undertaking activities which they would have otherwise refrained from doing so. The
increased competition in the industry is also a result of the transfer of imperfect information to
the consumers using the financial services and ultimately impacts them in an adverse manner.
The excessive focus on the tangible aspects results in the entity ignoring the welfare of the
consumers. This leads to the entity being labelled as one having a bad working culture and not
having sufficient regard about its corporate social responsibility.
Some of the other issues which continue to exist in the aspect of business culture include
the lack of paradigm change in the area of business culture. Some of the areas where the business
culture still needs to improve include the coexistence of a dynamic and static perspective of the
activities undertaken by a business. As the modern day businesses tend to be more complex and
multi-structured, it becomes essential to change the idea of a culture to something which fits the
entity as a whole (Rohlfer & Zhang, 2016, p.47). Further efforts should be undertaken in
ensuring that all the people have a clear idea about the culture of the organisation and are willing
to put the benefits of the entity above their individual benefits.
Importance of Ethics
Business ethics is a broader term used to describe a variety of aspects of a business. It can
be defined as the policies and practices implemented by an organisation in dealing with
significant and controversial issues like corporate governance, insider trading, workplace

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discrimination, priority to the interests of the stakeholders and other responsibilities of the
business. The purpose of business ethics is to ensure that the organisation refrains from causing
unnecessary harm to the unrelated parties to fulfil its profit making and other objectives. One of
the most important theories in the modern day ethics is the Macintyrean virtue ethics (Fernando
& Moore, 2015, p. 199). This theory suggests that the character and virtue play an important role
in the moral philosophy of an individual rather than when they consider it to be their
responsibility or when they think that they want to do something good for the benefit of the
society in which they are operating. In order to implement these ethics as a part of the culture of
an organisation, it is imperative that the organisation consists of people who are willing to act in
a virtuous manner in all situations and do not deviate from it under any circumstances. The
business entity should focus on becoming an institution which combines both virtuous and profit
making steps as a part of its business procedures. This ensures that the public are also able to
maintain a certain level of trust in the activities undertaken by the organisation.
Ethical Branding
It has been found that the quality of the products and services provided by an entity
directly impact the perceptions of the customers about its worth. The same cannot be said about
the price and other factors which are not directly accessible to the customers. However, all of
them play an important role in enhancing the reputation amongst the general public. In order to
market one as an ethical entity, it becomes essential that the services provided by the entity and it
conform to the accepted norms of what constitutes an ethical business practice (Alwi, S.F.S, Ali,
S.M. & Nguyen, B., 2017, p. 389). Further research is being undertaken in this areas to ensure a
shift in the paradigm in the manner in which ethical behaviour of an entity is analysed in the
modern day business environment. Apart from the complexities, there is a reduction in the divide

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between the eastern and western countries to ensure that the modern day businesses conform to
the expectations that a globalised customer base places on them and becomes a criteria for
measuring the overall performance of an entity involved in the business.
Steps to implement efficient business culture
One of the most discussed about the culture of a business is the fact that whether it can be
described as being ethical or unethical. However, most of the arguments in this regard tend to
discuss about an organisation as a whole and forget one of the most significant aspects. It is the
people charged with the responsibility of the managing the organisation and are responsible for
the activities undertaken by it. It also includes the employees and the manner in which they
conduct themselves in the workplace (Dempsey, 2015, p. 330). Due to the increased demand
about organisations having public accountability, it becomes imperative that organisations and
all people in it behave in a manner in which they undertake the responsibility of the actions of
the organisation and remain accountable to the affected parties. Some of the famous corporate
scandals like Enron and Barclays resulted in the employees accepting the fraudulent activities
undertaken by their entities and prioritising profits over welfare. In situations like these, the
employees should also be held responsible for the misdoings of the organisation. This will result
in an increase in the undertaking of increased responsibility by them and always act to ensure
that the reputation of the organisation is not damaged in any manner. Although this may also
result in some of the innocent employees getting punished, extreme care should be taken to avoid
the same. Sufficient focus is essential to ensure that accepting moral responsibility becomes a
significant part of the business culture of an organisation.

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Conclusion
On the basis of the above discussion, it can be concluded that the business culture and
ethics have become increasingly important in the modern day business. This is because of the
increased public demand about the organisations taking responsibility for their actions and
behaving in a responsible manner towards the society. Hence, the modern day businesses are not
only expected to generate profits but also take the welfare of the society into consideration. In
order to implement a good business culture, the organisation should implement ethical behaviour
as a means of conducting the business and not some obligation created by the external forces. As
employees are one of the most important aspect of an organisation, their focus should lie on
acting virtuously in all situations and take responsibility for the activities of the organisation.
While it is increasingly difficult to make employees act in such a manner in all situations, having
a set of guidelines like strong internal controls and strict penalties for misdoings can go some
way in ensuring a healthy business culture in an organisation. Ethics are also important in a
business in ensuring that all kind of adverse situations are dealt with in the most amicable
manner possible by an entity. Apart from finding the best possible solution for a problem, ethical
behaviour also plays an important role in enhancing the reputation of a brand. Hence, acting
ethically in all situations plays an important role in the consumers perceiving a business as
responsible and have more confidence in its abilities towards fulfilling its responsibility for the
society. Apart from this, it also helps a business in marketing itself as one which cares about the
consumer perception towards its business practices. On an overall basis, the focus of a business
should go beyond profit making and should also consider the stakeholders attached to it.

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References
Alwi, S.F.S, Ali, S.M. & Nguyen, B., 2017, The importance of ethics in branding: Mediating
effects of ethical branding on company reputation and brand loyalty, Business Ethics
Quarterly, 27(3), pp.393-422.
Davis, K, 2019, The Hayne Royal Commission and financial sector misbehaviour: Lasting
change or temporary fix?, The Economic and Labour Relations Review, 30(2), pp.200-221.
Dempsey, J 2015, Moral responsibility, shared values, and corporate culture. Business Ethics
Quarterly, 25(3), pp.319-340.
Fernando, M & Moore, G., 2015. MacIntyrean virtue ethics in business: A cross-cultural
comparison. Journal of Business Ethics, 132(1), pp.185-202.
Rohlfer, S & Zhang, Y, 2016, Culture studies in international business: paradigmatic
shifts, European Business Review, 28(1), pp.39-62.