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Introduction To Business Ethics and Fraud: IT Auditing & Assurance, 2e, Hall & Singleton
Introduction To Business Ethics and Fraud: IT Auditing & Assurance, 2e, Hall & Singleton
Introduction To Business Ethics and Fraud: IT Auditing & Assurance, 2e, Hall & Singleton
Introduction to Business
Ethics and Fraud
Business Ethics
How do managers decide on what is right
in conducting business?
Once managers have recognized what is
right, how to they achieve it?
The necessity to have an articulate
foundation for ethics and a consistent
application of the
IT Auditing ethical standards.
& Assurance, 2e, Hal
BUSINESS ETHICS
Basis of Ethical Standards
Religious
Philosophical
Historical
IBM combination of all three
Ethical Issues in Business [Table 11-1]
Equity Honesty
Exec. salaries Conflicts of interest
Pricing Security of data & records
Rights Foreign practices [FCPA]
Health (screening) Accurate F/S reporting
Privacy Exercise of Corp. Power
Sexual harassment PAC, and politics
Equal opportunity Workplace safety
Whistleblowing Downsizing, closures
IT Auditing & Assurance, 2e, Hal
IMPLEMENTING BUSINESS ETHICS
1990 Business Roundtable
Greater commitment of top management
Written codes (policy) that clearly
communicate standards and expectations
Programs to implement ethical guidelines
Techniques to monitor compliance
Boeing
Uses line managers to lead ethics training
Toll-free number to report violations
General Mills
Published guidelines with vendors, competitors, customers
Johnson & Johnson
Creed integral to its culture
Uses surveys to ascertain compliance
SAIC
Toll-free number, required training, separate dept.
Ethical Development
Most people develop a personal code of ethics from
family, formal education, and personal experience
Go through stages of moral evolution [Figure 11-2]
Ethical Principles
Proportionality: Benefits of a decision must outweigh the
risks. Choose least risky option.
Justice: Distribute benefits of decision fairly to those who
share risks. Those who do not benefit should not carry any
risk
Minimize Risk: Minimize all risks.
IT Auditing & Assurance, 2e, Hal
COMPUTER ETHICS
The analysis of the nature and social impact
of computer technology and the
corresponding formulation and justification
of policies for the ethical use of such
technology.
Levels of Computer Ethics
POP: the exposure to stories and reports in popular media
PARA: taking a real interest in computer ethics cases and
acquiring some level of skill and knowledge
THEORETICAL: multi-disciplinary researchers who apply the
theories of philosophy, sociology, and psychology to computer
science, intending to bring some new understanding to the field.
That is, ethics research.
1. False representation
2. Material fact
3. Intent
4. Justifiable reliance
5. Injury or loss
Financial fraud
1. Does not involve direct theft of assets
2. Often objective is to obtain higher stock price (i.e., financial fraud)
3. Typically involves misstating financial data to gain additional
compensation, promotion, or escape penalty for poor
performance
4. Often escapes detection until irreparable harm has been done
5. Usually, perpetrator is executive management
Corruption fraud
1. Bribery, etc.
Employee Theft
1) Theft of asset
2) Conversion of asset (to cash, to
fraudster)
3) Concealment of fraud