WHY ETHICS IS IMPORTANT AUDITORS

Why Ethics is Important for Auditors

Why Ethics is Important for Auditors

Introduction

Business organisations like Lucas Corporation have recognised for some time that they have had a problem maintaining their unique identities and corporate cultures. That positive corporate image which took so long to secure, too quickly evaporates when confronted by social forces inside and outside the firm. The purpose of this report is to identify the forces which have caused a disintegration of a corporate identity. The report examines the use of codes of conduct as a vehicle to provide a benchmark, a stable foundation or core of a corporation.

Discussion

In addition, the role of the audit function in formulating, clarifying, monitoring and modifying the code will be examined. Finally, the results of a small sample survey of public utility firms is explored to show the contribution of employees from various functional areas to the development and maintenance of a corporate code of conduct. The difficulty with the issues covered here are only exacerbated when one considers multinational corporations. (Sanderson, G.R. and Varner, I.I., 1984, pp. 28-31)

It is assumed that a corporation's identity presupposes relative organisational stability. It also assumes a corporate communication system that emits an "identity" message from top management that is relatively simple, clear and consistent, and that is grounded in action consistent with that message. It is easy to see that anything that violates or runs counter to these assumptions weakens the ability of a corporation to maintain or strengthen its identity or culture.

A partial list of forces that disrupt organisational stability and therefore negatively affect a corporation's identity include: (1) diverse background of corporate employees, (2) decentralisation, (3) employee turnover, (4) mergers and acquisitions, (5) technological change, and (6) general social and economic change. (1) diverse background of corporate employees, (2) decentralisation, (3) employee turnover, (4) mergers and acquisitions, (5) technological change, and (6) general social and economic change. Decentralisation can fracture the uniformity of goals and values of the larger organisation and interrupt their communication to the various operating units. Cohen, P., "Riding it Out: Fred Joseph Emerges Unscathed after Deal by Drexel and SEC", Wall Street Journal, Vol. CCXIII No. 4, 17 April 1989.

Conclusion

Internal control are probably overextending their expertise, given that controls are an integral and pervasive part of management's planning, organising and directing activities. The authors agree with Chambers et al. who suggest that internal ...