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Identify Situations Requiring Complex Ethical Decision Making

  • Risk managers in the insurance industry work for managing the risk situation in the industry. Good risk management is needed for good ethics and good ethics requires good risk management (Adeyele & Maiturare, 2012). For an organization, ethical conduct is necessary to manage the risk so everyone who is presenting the organization must practice good ethics.

Actuaries in the financial and insurance services industry help in the calculation of the risk which is presented by the policyholders. Ethical conduct is important because if it is not present then there will be a conflict of interest that may arise (Hossain, Sobhani, Omar, Mohamad & Said, 2019)

The chief financial officer is the person who manages all the work of the company and from his part ethical considerations need to be done because to gain public trust in the financial and investment profession ethics are necessary. An ethics-based culture helps foster trust and benefits society (Hossain et al., 2019).

  • A businessman intentionally shows high assets but hides the liabilities and debt so as to qualify a loan, the same example is of Enron who did the same and gone bankrupt (Gale, 2017).

Another example is overbilling a client or the agency of the government for more than the actual price of the goods.

Another example is misleading marketing, i.e. the good advertisement presentation to the customers about the product and services. This attracts customers to buy the product and promise then for that which cannot be delivered by the product which in turn can increase the sale in the short term. But in long run, due to dissatisfaction among customers, the sales automatically decrease (Gale, 2017).

  • The incentives and the rewards provided by the company helps in motivating and increase the performance of the employees but if the same is not provided to some of them, then it may lead to unethical behavior in the workplace (Kirgios, Chang, Levine, Milkman & Kessler, 2020). Incentive programs can increase the working interest of the employees. Initially, it promotes the efficiency of employees to work more and get incentives but the increased greediness among them may hamper the quality of work delivered by them in order to gain more incentives and may lead to unethical decision making.
  • The organization culture may affect an employee's ability to make ethical decisions as it can influence ways by which employees frame their ethical dilemmas, use of the resources, and their engagement with each other (Griffin et al., 2020). The organization is the key determinant of an individual ethical ideology. Cultureacts as a guideline in determining whether certain practices are appropriate and acceptable. The organizational culture influences the decision of its members and the employees of the company. An organization with having a strong culture has values and standards that are clearly defined and understood by the majority of its members. The organization culture provides a clear expectation of what is good or what is not good and its focus on the skills building and the problem-solving capabilities of the employees (Griffin et al., 2020). Hence in this way, organizational culture can affect an employee's ability to make ethical decisions.
  • There are specific situations that affect the employee's ability to make ethical decisions like the personal moral philosophy, the moral development stage, motivation, and values. For example, it is an employee’s moral philosophy which guides him in deciding whether to work for profits, or to work for the customer satisfaction. Enrolling employees on the ethical program may help in making ethical decisions (Griffin et al., 2020). It prescribes how to handle the complex ethical situation and to make ethical decisions.
  • Cognitive dissonance theory talks about those situations which involve conflicting attitude, beliefs, or behaviors and leads to the discomfort to an individual. According to the theory, these situations which lead to changes in the conflicting attitude, beliefs, or behaviors so to decrease discomfort and increasing relaxation (Akpan, Beard & Notar, 2018). This theory states that when an individual confronted any ethical situation at the workplace it may lead distress if the situation is inconsistent with his/her values and may lead to withdrawal and disengagement.
  • The simple conceptual framework for dealing with ethical dilemmas is the five-step question model which considers the ethical dilemma (ACCA, n.d.). They are-
  • What are the relevant facts?
  • What is the issue in which ethics are involved?
  • Which fundamental principles are threatened?
  • Is there any internal procedure is there which mitigate threats?
  • Is there any other course of action?

8) The code of ethics relevant to the accountant is APES 110 Code of Ethics for Professional Accountants (CPA Australia, n.d.). It is the standard of behavior that is accepted by the professional accountant and reflects the professional recognition of his/her responsibility for the public interest. There are five principles under this code including integrity, objectivity, professional competence and due care, confidentiality, and professional behaviour (CPA Australia, n.d.). 

  • Integrity: To be honest in all the professional relationships and be straightforward.
  • Objectivity: Prevention of conflict of interest, biasing or influence of others on business decision making.
  • Professional competence and due care: To be competent and smiled in performing all business operations.
  • Confidentiality: To maintain the confidentiality of information and no disclosure without permission.
  • Professional behaviour: To abide with all the regulations, Acts and policy for fair work practice.
  • The one way in which the unethical behavior in the workplace should be handled is to create the code of conduct in the organization which is to be adhered to by all the employees and workers so that there will be no unethical culture in the organization occurs.
  • The two methods that an organization might choose to communicate its ethics, values, and standards to its employees are first is to ensure the proper code of conduct, the values of the company and the whistle-blower policies are shared with the employees on very first day during their induction process. It is easier to communicate the standards to the employees before start of their work. The second method is thrugh corporate wallpapers and screensavers which should be used in the whole company to reinforce the code of conduct and values to the employees or everyone who are working in the organization (Griffin et al., 2020). So these methods will help communicate ethics to the employees of the company.

References for Code of Ethics for Professional Accountants

ACCA. (n.d.). The conceptual framework and ethical dilemmas. Retrieved from https://www.accaglobal.com/lk/en/about-us/regulation/ethics/conceptual-framework-ethical-dilemmas.html

Adeyele, J. S., & Maiturare, M. N. (2012). Repositioning the nigerian insurance industry for sustainable development: Risk management perspective. European Journal of Business and Management, 4(5), 22-30.

Akpan, J., Beard, L., & Notar, C. E. (2018). Cognitive Dissonance: The bane of value systems. Reason, 1(6).

Gale, C. L. (2017). Corporate Disasters: Financial Reporting Flaws. Gale: Cengage Learning.

Griffin, R. W., Phillips, J. M., Gully, S. M., Creed, A., Gribble, L., & Watson, M. (2020). Organisational behaviour: Engaging people and organisations. Cengage AU.

Hossain, A., Sobhani, F. A., Omar, N., Mohamad, N., & Said, J. (2019). Corporate governance, risk management and ethical investment: Evidence from banking industries. International Journal of Financial Research, 10(5).

Kirgios, E. L., Chang, E. H., Levine, E. E., Milkman, K. L., & Kessler, J. B. (2020). Forgoing earned incentives to signal pure motives. Proceedings of the National Academy of Sciences, 117(29), 16891-16897.

CPA Australia. (n.d.). APES 110 Code of Ethics for Professional Accountants. Retrieved from https://www.cpaaustralia.com.au/-/media/corporate/allfiles/document/professional-resources/ethics/an-overview-of-apes-110-code-of-ethics.pdf?la=en&rev=647839bdfe2643a29ff7a46f65723c45

Remember, at the center of any academic work, lies clarity and evidence. Should you need further assistance, do look up to our Accounting and Finance Assignment Help

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