Introduction
Setting an effective ethical tone within the top management of an organization is important and necessary in conveying a commitment to integrity and ethical values to the employees. The ethical tone is an ideal blueprint for creating and maintaining a high-integrity organization environment. The main high-quality propositions that management can implement to establish a high tone at the top that conveys a commitment to integrity and ethical values are improving new employee screening, assigning proper authority, and rolling mandatory ethical training programs. For these proportions to work, the top management must lead by action and example. These proportions are discussed below.
Mandatory ethical training
The management should create a clear management policy statement that has compliance standards consistent with different ethical policies to be followed by the employees. The management policy statement should be presented to the employees in the form of periodic and mandatory ethics training programs at the organization. During this training, the management should set a standard by being the first group to append signatures. The ideal training models should encompass fraud detection and prevention as the primary focus to ensure that the stance of the company on compliance, procedures, standards, and responsibilities are integrated into the policy statement. By integrating these elements, the management will set a tone in how employees report misconduct since the program is informative of the omission and acts that are prohibited by the company and law to minimize criminal conduct situations. The training program should have a standardized module besides including new employees. To make the ethical training effective and customized within the organization’s culture, there is a need to make the program continuous and an ongoing process for all employees (ASX 45). During these sessions, the top management should take the opportunity to communicate and proactively reinforce the code of conduct, values, and expectations. The training techniques that may be adopted include films, interactive workshops, and lectures that must meet preset compliance standards.
The training program should also incorporate interactive lessons on disciplinary measures, consistency in discipline, and guidelines to appropriate punishment for different ethical violations. Since consistency in a discipline requires a distinct categorization of different sanctions for disobedience, there is a need to incorporate a strict adherence policy as a guide in prescribing the disciplinary measures. For instance, the top management may insist on fairness and equality by categorically stating that punishment and rewards for ethical and unethical behaviors are addressed without fear or favor (Gramling and Myers 35). For example, during the training sessions, the top management may remind the employees that deterring violation is a top priority by presenting attractive awards for employees with high ethical conduct to reinforce the significance of organizational ethical expectations in the eyes of all employees.
Creating an explicit system for new employee screening
Since the organization structure is dynamic and flexible to various changes in the code of conduct and corporate governance, the top management should institute an explicit new employee screening system at the point of employment in line with the ACFE manual. This strategy will create a setup for establishing a stable moral tone for recruiting morally-sound personnel since their conduct will be subjected to scrutiny before employment. In most cases, the aspects of urgency and emotional judgments make the hiring process hasty and casual. This attitude can be attributed to the business-as-usual approach in recruiting employees without conducting a thorough background search. Therefore, to set a high ethical tone in the organization, it is necessary to carry out a comprehensive background check for potential employees before employment. The background search should be created as an organization’s employment policy in partnership with different agencies such as the police, social organizations, anti-fraud units, learning institutions, and past employers among others. The examination should dwell on areas such as education credentials, employment history, criminal record, credit record, and references. For instance, introducing a policy on mandatory inclusion of contact of former employers might help the management determine the individual ethical behavior in terms of loyalty, trustworthiness, discipline, and moral conduct. In the end, the organization will be able to avoid instances of unethical employee behavior that could have been detected at the recruitment stage (Gramling and Myers 32). Apart from the background search policy, the organization should also create a comprehensive employee recruitment checklist highlighting the minimum ethical standard requirements when sourcing personnel.
Assign proper authority and responsibility
To set a high tone for ethical behavior at the organization, the top management must create a responsibility policy that determines the ideal working environment, which allows all employees to thrive well without necessarily practicing unethical conduct (Jennings 48). This means that the top management of the organization should provide the employees with specific job roles and performance expectations within a definite period. These performance expectations should be proactively reviewed on a routine basis as a strategy for guaranteeing that the standards set are not unrealistic or excessively pressurizing. Therefore, there is a need to provide role allocation and expectations training to create a holistic work environment that is friendly to employees in performing effectively and maintaining their skills. As a result, the employees will be empowered to be able to proactively pinpoint probable trouble spots and stay away from finding themselves in conciliating situations. When authority and responsibility are properly assigned, the management will be able to instantly identify and determine spots that have deficiencies in role execution to interactively partner with the employees in fixing the mess (Thompson 71).
The aspect of assigning proper responsibility and authority may include the creation of a hotline in line with the ACEF standards within the organization to help employees report challenges in meeting performance targets and role execution (Barrier 56). The hotline might also be helpful to employees who whistleblow unethical conducts they encounter in role execution. As indicated in the NBES survey, employees are less likely to engage in unethical conduct when they are fully aware of different ethical conducts in the workplace (Moeller 49). By promoting the hotline, the management team will be in a position to create fear and responsibility in performing allocated roles since the system is flexible to record excellence or misconduct to promote efficient and sustainable internal controls within the organization.
Conclusion
The audit committee and the CEO should be able to identify fraud risks, institute different anti-fraud measures, and set up an apposite high tone at the top periodically and systematically. The audit committee should be very active in the oversight role to deter fraudulent activities in the organization by implementing the proposed activities such as new employee screening, proper role, and responsibility allocation, and instituting a proactive ethical training program.
References
ASX. Principles of Good Corporate Governance and Best Practice Recommendations, Sydney, Australia: Australian Stock Exchange Corporate Governance Council, 2008. Print.
Barrier, Michael. “One Right Path.” Internal Auditor, 60.6 (2009): 52‐57. Print
Gramling, Arnold and Paul Myers. “Internal Auditors’ Assessment of Fraud Warning Signs: Implications for External Auditors.”The CPA Journal, 73.6 (2006): 20‐34. Print.
Jennings, Michael. “The Critical Role of Ethics.” Internal Auditor, 60.6 (2009): 46‐51. Print.
Moeller, Robert. “Managing Internal Audit in a Post‐SOA World.” The Journal of Corporate Accounting and Finance, 15.4 (2008): 41‐55. Print.
Thompson, Caleb. “Fraud Findings: Willful Blindness.” Internal Auditor, 60.3 (2010): 71‐83. Print.