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Ethical auditing and ethical knowledge
... There is a general belief that the term 'ethical' does not have a fixed content, as it is a subjective opinion derived from personal ideals, feelings, or conscience. As long as the auditing entities do not believe in the necessity of ethical compliance in their work, this concept remains limited to its psychological or emotional dimensions (Mackenzie, 1998). Ethical behaviour does not occur spontaneously and creating an ethical organisation and maintaining a high level of ethical standard among professional accountants requires constant attention and hard effort (Bazerman et al., 2002). ...
... They believe that the new auditing needs in Malaysia and Indonesia necessitate the use of Islamic concepts in the legislation related to this profession. Mackenzie (1998) believes that auditing should be based on ethical principles. In a study by Keller et al. (2007), it was concluded that religion affects the ethics of accountants in the USA. ...
... For corporate practice what applies to companies is that they should orient their actions to the factors of success [22,23]: − the existence of a sustainable company mission statement, − referencing their own conduct to sustainability indices (Dow Jones Sustainability Index, FTSE4GOOD Index, other index), − reference to the SDGs as corporate objectives (Clean Water and Sanitation, Industry/Innovation and Infra-structure, Peace/Justice and Strong Institutions, other), − the usage of voluntary standards for (sustainability) reporting (GRI, ISO26000, UN Global Compact), − the existence of corporate resources, − recognising which criteria are relevant for measuring sustainability and can thus be included in the assessment of rating agencies, for example, focusing in implementation on the areas processes, products and management and − internal documentation of sustainable conduct in the company. The more this occurs the more ethically sustainable conduct in the company is both perceived and realisable and the chain of actions assumed in the hypothesis will take place. ...
Ethical behaviour in companies is built on principles, rules, values and resources. As integrative ethics, the macro level ensures a long-term and sustainable orientation of the company in the context of business ethics. The macro level ensures that the company can change its role from “expactant” to “creator” with regard to corporate ethics. The mezzo level prevents unethical behaviour in companies by offering them the opportunity to reflect on their own behaviour in the context of (government) guidelines. Finally, the micro level is considered essential. It creates the systemic preconditions for companies to be able to fulfil their ethical duties and take responsibility for their actions. Partnerships and networks play a central role in this context. Against this background, the existence of a regulatory framework, the measurement of ethical corporate behaviour with the help of standards and reporting, the existence of a sustainable corporate mission statement as well as the availability of necessary resources and the documentation of sustainable behaviour in the company can be derived from the literature as central success factors for the implementation of ethical standards in companies. These factors are compared by means of empirical research with a focus on the packaging industry in Germany, Switzerland and Austria so that the existence of a guiding regulatory framework in society and a sustainable corporate mission statement emerge as the final and particularly relevant characteristics for an ethically-sustainable company, the referencing of one’s own behaviour to sustainability indices, the use of the same (in particular the Dow Jones Sustainability (DJSI) and the Financial Times Stock Exchange (FTSE4 Good) indices) in reporting, the reference to the Sustainable Development Goals (SDGs) in the formulation of the corporate objective and the use of voluntary standards in sustainability reporting.
... There is a general belief that the term "ethical" does not have a real content, rather it is a personal belief resulted from mental ideas, personal feelings or conscience of people. As long as auditing entities do not consider ethics in their works, this issue will be limited to a psychological or emotional issue (Mackenzie, 1998). ...
Purpose
The validity and legitimacy of auditing profession depends on trust as one of the most important assets of auditing profession that trust itself is directly derived from capacity of this profession in responding to responsibilities. The present research has tried to identify 15 ethical values in auditing and analyzing causal relationships of ethical values in auditing from Islam’s perspective using fuzzy decision-making trial and evaluation laboratory (DEMATEL) approach. The purpose of this paper is analyzing causal relationships of ethical values in auditing from Islam’s perspective because ethical values improve auditing and keep the auditor’s independence.
Design/methodology/approach
Reviewing the literature and conducting a survey among 14 certified auditing experts, 15 ethical values in auditing were identified according to Islamic law using fuzzy DEMATEL techniques. Adopting this approach, the study was then to determine causal relationships and to identify influential values.
Findings
Based on the findings, the metrics “independence” with (D−R) = +1.045 was identified to be the cornerstone of the auditing profession. Independence is an essential component for users’ trust in the financial statements. If it is ignored, many other values will further make no sense. Truth-seeking as a value with (D + R) = +3.289 has the greatest interaction with other values, and this reveals that truth-seeking is one of the most significant auditing missions. Additionally, the value “trust” with (D−R) = −1.605 is mostly affected by other variables, suggesting that other values strongly influence this value, and it will be distorted if other values are ignored.
Research limitations/implications
Auditing ethics is one of the most important and striking factors that maintains the credibility and dignity of the auditing profession. Today, the society’s expectations from auditing and accounting professions have increased. Increasing these expectations requires official accountants to provide their professional services in the form of ethical auditing. As this model has been designed using the ideas of the Muslim professional experts, the results may be different from those of non-Muslim professional experts.
Originality/value
Considering that identified values are of great importance in Islam religion, it seems that using Islamic culture and pragmatic tone by professionals, scholars and legislative bodies is necessary to create changes required in the current business culture and as the result to create fundamental changes in professional behaviors of auditing area. This study is the first to provide evidence on the improvement of auditing based on a review of auditing studies in Islam.
... The empirical approach in matter of right decisions could contribute to build the ethical knowledge enterprises (C. Mackenzie, 1998). ...
The ongoing debate in the literature centres on the compromised auditor’s independence in consequence of the relevant provisions perceived for non-audit services provided to the audited clients. The accounting scandals that have occurred over the past two decades show the lack of competence and independence of external auditors, who kept quite in the face of attempted frauds. The case of Tesco represents an undeniable example of the loss of auditor’s independence, who failed to detect accounting manipulation confirming the importance of whistle-blowing procedures in disclosing concerns before they become serious problems. When turnover occurs in CEOs it is more likely that a rotation in external auditors occurs as well. Finally, changes in top management enable whistle-blowing actions to be successful, interrupting the organization’s dependence on serious wrongdoings and preventing a disastrous ending. The success of whistle-blowing in preventing company failure makes it an effective instrument of сorporate пovernance.
... Hare, and C. L. Stevenson 6 , argue that -ethical knowledge is impossible‖ (Mackenzie, 1998(Mackenzie, , p. 1395). This perspective holds that empirical knowledge does not lead to any conception of what we should do in order to act ethically (Mackenzie, 1998) 7 . ...
The authors of this paper believe that scholarly work on knowledge management (KM) has largely overlooked ethical considerations. As such, this paper argues for the infusion of ethical considerations into knowledge management (KM) research. Using the lens of the classical ethical theories in philosophy, this paper revisits key areas of KM-knowledge creation, storage and access, transfer, and application-and generates relevant research questions in each of these areas. The paper highlights the importance of examining ethical issues related to KM, and offers an illustrative set of ethically-informed research themes and questions that can potentially be investigated by future studies.
... According to Mackenzie (1998), Domingo (2005 and Kaptein (1998) ethics auditing reflect the extent to which the company meets the economic, social, and environmental demands on which the trust placed in it depends. Usually ethics audit involves compliance with stated rules or regulation (code of conduct, values statements etc.) or by other words comparison between actual employee behaviour provided in rules and procedures. ...
The aims of this article are to test how does enhanced ethics audit model as a new tool for management in Estonian companies work and to investigate through ethics audit model the hidden ethical risks in information technology which occur in everyday work and may be of harm to stakeholders’ interests. Carrying out ethics audit requires the diversity of research methods. Therefore throughout the research the authors took into account triangulation method. The research was conducted through qualitative approach and an analysis on a case study, which also included interviews, questionnaires and observations. Reason why authors audited ethical aspects of company´s info technology field is due to the fact that info technology as such is an area which is not handled in any CSR reports but may cause serious ethical risks to company ́s stakeholders. The article concludes with suggesting an extension of the ethics audit model for evaluating ethical risks and for companies to help to raise employees’- awareness about safe internet using and responsibility towards protecting the organization’s information technology and to prevent ethical and moral risks occurring
... It will help to identify various components of a company's value that are not always apparent when simply assessing its financial performance. According to Mackenzie (1998), Domingo (2005, and Kaptein (1998), ethics auditing has very little to do with the traditional auditing of accounts. It aims to reflect the extent to which the company meets the economic, social, and environmental demands on which the trust placed in it depends. ...
Succession accounts for a crucial moment in a family business because it can impact the durability of its activities. The aim of this paper is to analyze the influence of succession on family firm social performance. Using paired samples methodology, three hypotheses were tested upon a sample of Belgian family SMEs that had been handed on. This methodology compares the performances of family SMEs handed on to an internal successor with those handed on to an external successor. 78 pairs “transmitted SMEs/not transmitted SMEs” were constituted and analysed. Results of this research show that it is desirable to give priority to an internal successor in order to carry out the adequate strategic choices and to obtain the trust of the company staff. The overall results show that social performance of SMEs was affected by the succession (increase in worker productivity, wage cuts and payroll contraction). However, only the hypothesis of a decrease in workers wages could be confirmed in the case of the internal successor. This result confirms the conclusions of previous studies highlighting differences of opinion as to the link between the performance of handed-on companies and the nature of the successor.
... Business ethics and social responsibility are themes that are given considerable attention in companies as well as in academic journals (Weaver et al., 1999;Mackenzie, 1998;Nitkin and Brooks, 1998;Maurey et al., 1999;Taylor et al., 1999;Daisuke, 1999). Employees, customers, suppliers, competitors, and government are all placing increasing demands on management. ...
In this paper a corporate social responsibility audit is developed following the underlying methodology of the quality award/excellence models. Firstly the extent to which the quality awards already incorporate the development of social responsibility is examined by looking at the Malcolm Baldrige National Quality Award and the European Quality Award. It will be shown that the quality awards do not yet include ethical aspects in relation to social responsibility. Both a clear definition of social responsibility and an improved audit instrument are required. A definition and an audit instrument are developed which stimulate movement in that direction and help organisations to reflect on their position in relation to social responsibility.
The growing instance of corporate frauds has necessitated the stronger regulations in the field of corporate with the help of increasing technological invocations. The Social Responsibility Accounting is a phrase that is gaining significance in such a corporate environment to bring light on the societal obligations. In spite of the growing stress laid on the need for Social Responsibility Accounting, the regulatory framework even in the most advanced economies has failed to establish a universally accepted standard for such reporting, as is available for traditional financial information reporting. The present study aims to identify the most widely accepted models and critically review them, to enhance its applicability in the modern-day business environment. For that purpose the various models of social responsibility accounting such as Seidler’s Model of Social Accounting, Ralph’s Comprehensive Social Benefit Cost Model, and The Cost-Benefit Analysis Technique (ABT Associate model are analyzed and a Conceptual Frame Work for Social responsibility accounting is suggested based on the analysis of these models. Such a model combines all the superior aspects of all models for the purpose of culminating all primary stakeholders’ perspective.
It is generally accepted that behaving ethically is essential to the success of organizations. The failure to behave ethically in the eyes of key stakeholders can impair the health of organizations. This is particularly the case with organizations who are potentially vulnerable to direct consumer action and also the state agencies who provide various services for their citizens. In this paper, we analyze the involvement of internal audit in the provision of assurance in relation to the ethics implementations in organizations. Internal audit is expected to conduct an effective ethical audit as a high priority in a risk-based internal audit planning process which is required by the International Professional Practices Framework (IPPF) of the Institute of Internal Auditors (IIA). The provision of assurance concerning successful implementation of an ethics policy as a contribution to the achievement of organizational objectives is becoming increasingly critical. That’s why, it is examined whether internal audit is ready for responding to this challenge globally. The Common Body of Knowledge (CBOK) data of IIA are used for analyzing the current situation about determinants of ethics auditing all over the world. We propose a structural equation model (SEM) utilizing a worldwide dataset of CBOK data with responses from internal auditors. The determinants of ethics auditing is estimated by using SEM with 20 observed variables loaded to six factors namely, Audit Policy Documents, Auditor Integrity, Audit Policy Documents, Ethics Standards, Ethics Audit, and Corporate Governance. Finally, policy recommendations are made based on empirical findings to add value to internal audit profession and stakeholders.
Reviews of business ethics usually differentiate the field in terms of prescription as opposed to description: the application of normative ethical theory verses empirical analysis. Despite recent departures from this dualism, through the elaboration of what has been called postmodern business ethics, the metatheoretical basis of this (increasing) pluralism of business ethics remains opaque. This paper attempts to provide some reflexive clarification and, using codes of ethics as an example, to show that the diversity of business ethics is neither chaotic nor haphazard. It explores how variable metatheoretical assumptions about the epistemic status of ethical and social scientific knowledge systematically lead to the constitution of four distinct modes of engagement in business ethics: prescriptive ethics; descriptive ethics; postmodern ethics; and critical ethics. This diversity is illustrated, with examples from the relevant literatures, in terms of variation in: the aims of business ethics; its organisational focus; the role of the business ethicist; how corporate codes of ethics are construed; the internal contradictions and tensions that arise. We conclude by examining the pre-paradigmatic status of these four modes of engagement and speculating about their future.
What sort of connection is there between business ethics and philosophy? The answer given here: a weak one, but it may be getting stronger. Comparatively few business ethics articles are structurally dependent on mainstream academic philosophy or on such sub-specialities thereof as normative ethics, moral theory, and social and political philosophy. Examining articles recently published in the Journal of Business Ethics that declare some dependence, the author finds that such declarations often constitute only a pro forma gesture which could be omitted without detriment to the paper's content and conclusions. He also finds, however, that some authors do draw on solid philosophical work in ways that are establishing ever more meaningful interconnections between business ethics and academic philosophy. These cross-disciplinary studies, he concludes, are ground-breaking and invite creative imitation.
When we talk about Organizational Ethics we are referring to the set of values that identify an organization, from within (which comes down to the understanding that those who are part of the organization have about it) as well as from outside (which comes down to the perception that those who have a relation with an organization have of it). Such set of values can be considered in a broad sense (that is, the set of values structuring the organization and its practices, be they instrumental or final values, positive or negative) or in a stricter sense (and then we will refer only to those values that express the vision, the raison d’être and the commitments of the organization, and that are linked to their corporate and moral identity). Synthetically we could say that in the first case we would find those organizations that ask themselves how to make progress in search of excellence; in the second, those organizations that ask themselves what is necessary for corporate moral excellence?
There has been much theoretical debate on issues of business ethics during the last decades, but there has been little research which could concretise the content of these issues in terms of practical business. Although business life must frequently deal with concepts such as corporate social performance, business ethics and the acceptability of operations, the content and meaning of these concepts has remained flexible. In addition, rapid internationalisation and globalisation have introduced a number of new phenomena related to corporate social performance. An attempt at defining the concepts more precisely and searching for a potential indicator was considered necessary in order to concretise the business environment facing corporations engaged in internationalisation and globalisation. The connection between corporate social performance and stakeholder theory provides a basis for the proposal put forward here that acceptability of operation could be employed as an indicator of corporate social performance. This approach was then applied to developing a model which could be used to assess corporate social performance.
The U.S. Supreme Court’s race jurisprudence suffers from a stunning lack of imagination where possibilities for meaningful local government involvement in combating structural racial inequality are concerned. Cases such as Parents. and Ricci limit dramatically the freedom that localities have to address racial inequity within their borders. Instead of constraints on local efforts in the race context, Professor Lenhardt argues that what we need, if persistent racial inequalities are ever to be eliminated, is greater innovation and experimentation. In this article, Professor Lenhardt thus introduces an extra-judicial tool called the race audit, which would permit individual cities or a regional coalition of localities voluntarily to determine the extent to which their governmental systems and policies create, enable, or perpetuate inequitable conditions for racial minorities. This tool, grounded in the tenets of structuralism, breaks from traditional audit mechanisms in the race context by eschewing a singular focus on intentional discrimination. Instead, it seeks to uncover the specific structural mechanisms that generate cumulative racial disadvantage across domains, time and generations by, inter alia, being attuned to the spatial dimensions, meaning, and operation of race in the United States. The race audit’s main goal – which falls outside the reach of most existing tools for measuring discrimination – would be achieved through the work of a “community of inquiry” consisting of academics, philanthropic organizations, non-profits and civil rights groups, governmental agencies, and business leaders charged with assessing the segregative effects of the locality’s policies and programs. The race audit process, whose results might be similar to those produced by truth and reconciliation commissions, would produce a counter-narrative about race in metropolitan areas whose telling would have numerous benefits, including generating more effective remedies for addressing structural discrimination, and promoting democratic conversations about equality and what is necessary to secure belonging at the local level. Most of all, the race audit would make apparent the deep potential cities have for being important “equality innovators.”
This chapter addresses the failure of American organizations to embrace the opportunities presented by the changing demographics of the nation's population. It summarizes the changing demographics, illustrating changes in the racial, ethnic, age and gender make-up of American society. It looks at some of the efforts organizations have developed to address these changes in an attempt to become more diverse in terms of social composition. It then addresses the pitfalls of the approaches, and the programmes and activities that organizations could pursue to become more diverse and, ultimately, reflective and representative of the American populace.
In 1999, the Journal of Business Ethics published its 1 500th article. This article commemorates the journal's quest "to improve the human condition" (Michalos, 1988, p. 1) with a summary and assessment of the first eighteen volumes. The first part provides an overview of JBE, highlighting the journal's growth, types of methodologies published, and the breadth of the field. The second part provides a detailed account of the quantitative research findings. Major research topics include (1) prevalence of ethical behavior, (2) ethical sensitivities, (3) ethics codes and programs, (4) corporate social performance and policies, (5) human resource practices and policies, and (6) professions – accounting, marketing/sales, and finance/strategy. Much remains to be done.
The aim of this paper is to put forward an ethical framework for the conceptualization and development of ethics audits, here understood as a catalyst for company dialogue and in general, for management of ethics in the company. Ethics auditing is understood as the opportunity and agreement to devise a system to inform on ethical corporate behavior. This system essentially aims to increase the transparency and credibility of the companys commitment to ethics. At the same time, the process of elaborating this system allows us to introduce the moral dimension into company actions and decisions, thereby completing a key dimension of the production, maintenance and development of trust capital. To this end, the following four steps are taken. First, we analyze the relation between ethics auditing and trust as a basic moral resource in the dialogue between the company and its various stakeholders. Second, we examine the social balance sheet as a precursor to ethics auditing and focus on what prevents it from going further. Third, we attempt to reconstruct the basic moral assumptions underlying the companys social responsibility from the discourse ethics approach. Finally, we present a methodological framework from which to carry out our proposal, which embraces two basic theoretical perspectives stakeholder theory and the values derived from discourse ethics as a normative framework.
This article presents a theorized and conceptually informed method for the undertaking of an ethics audit organization. At an operational level, the overall integrity of an organization, it is argued, may be evaluated through the application of a conceptual framework that embraces the inter-related themes of individual responsibility, social equity and political responsibility. Finally, a method is presented for ethics audit which was developed in the auditing of a national public sector sports organization: sportscotland. This emphasizes the significance of key personnel (individuals and in groups) in producing and reproducing the organizational ethos, whilst recognizing the importance of anonymity and confidentiality throughout the process. The theoretical terrain of the ethics audit is articulated through a consideration of ethics as applied moral philosophy, equity as social justice and corporate governance as the moral health (or otherwise) of a public sector sports organization. Copyright Springer Science+Business Media, Inc. 2007
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