Business risk consultancy

The code of ethics – why is it important for organisations and professions?

“Ethics is knowing the difference between what you have a right to do and what is right to do” – Potter Stewart

 

In life, distinguishing between right and wrong is not always easy. Multiple factors such as culture, beliefs and personality traits shape our decision-making process which in turn impacts our actions. Similarly, ethical behaviour is applied throughout our professional life.

 

Professionals are usually bound by a code of ethics which is structured on enacted laws and regulations, industry requirements and business needs. It contains several principles which aid professionals to conduct business honestly and with integrity. Normally, the document outlines the values of an organisation and the ethical approach that all employees must adhere to.

 

The code of ethics is an important tool which can enhance the reputation and the perception of the public of a profession and an organisation. In fact, local professionals such as lawyers, accountants, auditors and teachers must abide by a code of ethics which is issued by a recognised organisation. Moreover, businesses tend to establish their own code of ethics when they do not have an official code.

 

The following principles are the core elements to establish an effective code of ethics:

  1. Integrity – remaining straightforward and honest in all professional and business relationships;
  2. Objectivity – avoiding bias, conflict of interest or undue influence of others to override professional or business judgments;
  3. Professional competence and due care – maintaining the necessary professional knowledge and skill to provide competent professional services;
  4. Confidentiality – respecting the confidentiality of information acquired as a result of professional and business relationships, and not disclosing any such information to third parties without proper and specific authority, unless there is a legal or professional right or duty to disclose, nor use the information for personal advantage or third parties;
  5. Professional behavior – complying with relevant laws and regulations and avoid any action that discredits the profession.

 

Furthermore, professionals need to exercise an adequate level of skepticism in order to ensure the right implementation of the code of ethics. As a result, a balanced approach needs to be applied to assess situations that may lead to a breach of the code of ethics. In view of this, professionals need to be trained to apply critical thinking, eye for detail and vigilance to detect possible conflicts.  

 

In conclusion, organisations and businesses both worldwide and locally opt to have a code of ethics to ensure that all employees or members maintain the desired behavioural values and standards.

 

How can Grant Thornton assist you?

Grant Thornton offers a wide range of services to assist your organisations in mitigating regulatory and business risks which include:

  • Drafting and/or reviewing of policies and procedures;
  • Testing the effectiveness of policies and procedures; and
  • Providing training on several regulatory matters.

(Article by Lara Scicluna)