Assignment: Ethics Reporting System

Seminar in Business Ethics
Chapter 8 | Ethics Reporting System

By the end of
chapter we
will be able
to
Describe Describe the negative outcomes whistleblowing has on
both the whistle-blower and the organization
Manage Manage an assist line to receive employee complaints
by telephone or Internet
Establish Establish an ombudsman position
Create Create an ethics & compliance officer (ECO) position
Administer Administer an internal reporting system for ethical
issues

This chapter explores three internal communication m
obtaining information about unethical behaviour
Ethics & compliance officer (ECO)
An ombudsman
An assist line

Why employees see
unethical conduct,
but often don’t do
anything about it
• According to National Business Ethics
Survey these are the main reasons:
• 59% believe no corrective action will
be taken
• 46% fear retaliation
• 39% fear no anonymity
• 24% assumed someone else would
report it
• 18% did not know who to contact

Ethics & Compliance
Officer (ECO)

Ethics & Compliance Officer (ECO)
The ECO’s primary duty is to manage the organization’s internal reporting system.
Giving ethics high visibility demonstrates a good faith effort to enhance ethics within the organization
Some organizations assign a dedicated ECO for this role
Others assign it as a side task to one of the existing high-level employees
Some organizations make it a centralized role, so the ECO manages all ethical activities and its reporting system
Others make it a decentralized job, so the ECO gives the oversight, but every department or locations creates their own
ethical activities

Characteristics of an ECO
Well networked to
all business units
A high position
with authority
Well trusted and
respected from
other executives
Independent with
freedom
of organization’s
politics
Operationally
experienced
Has access to
internal
information
Gain knowledge to
ethics theories
Has high level of
communication
skills and problem-
solving skills

ECO’s scope
includes
Gift giving with suppliers and
customers
Personal use of organizational
property.
Asking probing questions to
clarify situational nuances

Ombudsman

Ombudsman
Another channel for communicating information about potential ethical and legal violations is an
organizational ombudsman.
The ombudsman concept originated in government and has spread to other types of organizations.
An ombudsman’s job scope is typically much narrower than that of an ECO

Ombudsman job scope inclu
Guarantees the employee anonymity
Investigates the employee’s concern,
Mediates a fair settlement,
Protects the employee from retaliation.
Serves as a deterrent against managerial abuse of power and other unethical
activities.

THE OMBUDSMAN IS GRANTED ACCESS TO ALL
EMPLOYEES, INCLUDING BOARD MEMBERS, WHEN
INVESTIGATING A COMPLAINT.
AN OMBUDSMAN, LIKE LAWYERS AND ACCOUNTANTS, IS
HELD LEGALLY ACCOUNTABLE TO A PROFESSIONAL CODE
OF ETHICS.

Four ethical principles by the International O
Association’s Code of Ethics
Independence Neutrality and
impartiality.
Confidentiality Informality

Types of Ombudsman
Classical
ombudsman
Mediator
ombudsman
Advocate
ombudsman

Situations
addressed by
Ombudsman
• A code of ethics violation
• Trading issues or violations
• Legal or compliance issues
• A situation that threatens employee safety
• Unfair treatment by a manager or co-worker
• Unfair pay as defined in the Fair Labour Standards Act
• Unfair treatment on the basis of sex, race, colour, ethnic
group, age, sexual orientation, or other affiliation

Assist Lines

Assist
Lines
‘‘ethics hotlines,’’ that have long
been popular with organizations as
a method of obtaining information
about situations that may be
unethical or illegal.

Assist Lines
The AICPA’s Professional Ethics Division offers
members two types of confidential assist
lines, one by telephone and the other by
email

Assist Lines– Types of Inquiries
Human resources issues Employees asking for ethics
policy clarifications

Effective Assist Lines
CONFIDENTIALITY FALSE ACCUSATIONS

How an Assist Line Works (Ethics Point
System)
An employee
anonymously
contacts the
assist line by e-
mail or
telephone and
receives a
confidential
case
identification
number.
The response
system is
scripted to
gather as much
information as
possible from
an anonymous
employee.
The
information is
categorized
based on type
of issue and
operations area
The Case is
anonymously
routed to the
appropriate
manager at the
employee’s
organization.
The
organizational
manager
receiving the
information
responds to the
system using
the case
identification
number.
The manager
can submit
additional
questions for
the employee
to
anonymously
answer or
clarify any
misunderstandi
ngs about the
organization’s
policy on the
issue.
The
anonymous
employee can
trace the case’s
progress using
the
identification
number.
These
communication
s are filtered
through the
system unless
the employee
who submitted
the inquiry is
willing to
contact the
manager
directly.

Four wrongdoing categories are hig
the colleges and universities
Unethical financial abuse, such as fraud.
Unethical personal conduct, such as discrimination.
Unethical treatment of college property, such as theft.
Unethical use of information technology, such as data privacy abuse.

Whistleblowing

What is whistle blowing?
Contacting someone outside the organization about
misconduct inside the organization is referred to as
whistleblowing.

What leads to whistleblowing?
When a management or non management employee
sincerely concerned about ethics works for an
organization that refuses to take action against
unethical or illegal activities.

When to blow
the whistle
Serious harm is
involved.
The whistle-blower
has already
expressed his or
her concerns to an
immediate
superior.
The whistle-blower
has exhausted
other
communication
channels within the
organization.
The whistle-blower
has convincing,
documented
evidence.

Submission considerations for
false acts
• The whistle-blower must have actual knowledge of the fraud,
not just a suspicion
• The fraud cannot be a tax fraud
• Federal money must be involved, or, in a state with a state
False Claims Act, state money must be involved.

Negative
outcome for
whistle-
blowers
Negative
performance
evaluations
Undesired job
transfers
Demotions
Criticism or
avoidance by
coworkers
Physical,
psychological, and
family problems
Loss of job or
forced retirement
Blacklisting
impeding
employment
Protracted legal
battles waged at
personal expense

Summary
Employees need multiple avenues to communicate information about
potentially illegal or unethical conduct.
Ethics & compliance officers, ombudsmen, and assist lines provide
employees with an institutional mechanism for reporting unethical or illegal
behaviours.
These internal reporting systems must be carefully managed. Otherwise, the
employee might externally blow the whistle, which can have significant
negative ramifications for both the organization and the employee.

Thank you
Mohamed Lasheen
Sarah Hassan Abd Al Aziz
Mohamed Mohsen
Shady Saleh
Saleh Tareq