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Ethics
-set of moral principles or values that govern the actions and decisions of an individual or group
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, 2009:
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2
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4
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5
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Characteristics and values associated with ethical behavior:
1
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Integrity
3
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Loyalty and Confidentiality
5
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Caring for Others
7
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Responsible Citizenship
9
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Accountability
Two primary reasons why people act unethically:
1
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The person chooses to act selfishly
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▪
▪
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Employees taking a long lunch
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Falsifying Time Sheets
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Lying about illness or family emergencies to get excused
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Utilitarian Approach
2
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Fairness or Justice
4
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The virtue approach

1
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2
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It all starts with a right and the right has corresponding obligation of respecting others, with the
goal of taking action that does not violate other’s rights
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Fairness or Justice
Ethical actions treat all human beings equally or if unequally, then fairly based on some defensible
standard
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Common good approach
Ethical actions benefit all the members
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5
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It involves asking questions like “Am I being
honest and fair in this situation?”, “What kind of person will I become if I do this?”

Code of Good Governance for the profession in the Philippines
This code covers the common principles underlying the codes of various profession
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Specific Principle of Professional Conduct:
1
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Integrity and Objectivity
3
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Solidarity and teamwork
5
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Global Competitiveness
7
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Independence in fact- ability to maintain an unbiased attitude towards the course of work
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Code of Ethics for Accountants
Developed by IESB (International Ethics Standard Board for Accountants), an independent
standard-setting body

Part A: General Application
Part B: Professional Accountants in Public Practice
Part C: Professional Accountants in Business

Part A: General Application
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establishes the fundamental principles of professional ethics for professional accountants
and provides a conceptual framework that professional accountants shall apply
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-A professional accountant shall comply with each of the fundamental principles
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2
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4
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Integrity
Objectivity
Professional competence and due care
Confidentiality
Professional Behavior

1
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-implies not merely honesty but fair dealing and truthfulness
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Objectivity: to not allow bias, conflict of interest or undue influence of others to override
professional or business judgments
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Professional competence and due care: to maintain professional knowledge and skill at the
level required to ensure that a client or employer receives competent professional services based
on current developments in practice, legislation, and techniques and act diligently following
applicable technical and professional standards
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Confidentiality: to respect the confidentiality of information acquired as a result of professional
and business relationships and therefore, not disclose 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 the personal advantage of the professional accountant or third parties
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Professional Behavior: to comply with the relevant laws and regulations and avoid any action
that discredits the profession
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Applying the conceptual framework requires exercising professional judgment, remaining alert for
new information and to changes in facts and circumstances, and using the reasonable and
informed third party test
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The reasonable and informed third party test
-is a consideration by the professional accountant about whether the same conclusions would likely
be reached by another party
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Part B: Professional Accountants in Public Practice
A professional accountant in public practice shall not knowingly engage in any business,
occupation, or activity that impairs or might impair integrity, objectivity, or the good reputation of
the profession and, as a result, would be incompatible with the fundamental principles
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Self-interest threat
2
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Advocacy threat
4
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Intimidation threat

1
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Ex
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2
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Ex
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3
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Example: A professional accountant acting as an advocate on behalf of an audit client in
litigation or disputes with third parties
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Familiarity threat: the threat that due to a long or close relationship with a client or
employer, a professional accountant will be too sympathetic to their interests
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Intimidation threat: the threat that a professional accountant will be deterred from acting
objectively because of actual or perceived pressures, including attempts to exercise undue
influence over the professional accountant
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1
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2
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Leadership of the firm that establishes the expectation that members of an assurance team
will act in the public interest
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•

Documented policies regarding the need to identify threats to compliance with the
fundamental principles, evaluate the significance of those threats, and apply safeguards to
eliminate or reduce the threats to an acceptable level, or when appropriate safeguards are
not available or cannot be applied, terminated or declined;

•

Documented internal policies and procedures requiring compliance with the fundamental
principles
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•

Policies and procedures to monitor and, if necessary, manage the reliance on revenue
received from a single client
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•

Policies and procedures to prohibit individuals who are not members of an engagement
team from inappropriately influencing the outcome of the engagement
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Designating a member of senior management to be responsible for overseeing the adequate
functioning of the firm's quality control system
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A disciplinary mechanism to promote compliance with policies and procedures
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Part C: Professional Accountants in Business
Professional accountants in business may be solely or jointly responsible for the preparation and
reporting of financial and other information, which both their employing organizations and third
parties may rely on
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Threats
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Safeguards:
The same safeguards would also be applied to eliminate the threats or reduce them to an acceptable
level
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In those extreme situations where all available safeguards have been exhausted, and it is not
possible to reduce the threat to an acceptable level, a professional accountant in business may
conclude that it is appropriate to resign from the employing organization
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0M and/ or annual revenue of at least
P10
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Business ethics
❑ It refers to standards of moral conduct, behavior, and judgment in business
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❑ It is based on the personal values and standards of each person
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SPECIAL PURPOSE:
1
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2
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3
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SCOPE OF BUSINESS ETHICS
Scope: covers all conduct, behavior, and judgment in business even acts that may be legal but
which are wrong because they violate ethical principles
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Equal work opportunities for all: regardless of gender, race, or creed
2
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Just Causes- fault of employee
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3
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The exemptions generally apply to those who hold managerial positions,
governmental employees, domestic helpers, workers paid by results such as those engaged in
piecework, and certain types of field workers, among others
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Weekly rest day
-day off 24 consecutive hours after 6 days of work

5
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6
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Employment of children
Minimum age of employment:
Hazardous- 18
Non-hazardous- 15
8
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Right to self-organization and collective bargaining: right to organize and join any
legitimate worker’s union, free from the interference of their employer or the government
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Misrepresentation
2
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Direct Misrepresentation
2
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This includes:
1
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Misbranding or mislabeling
3
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Adulteration- debasing a pure or genuine commodity by imitating or counterfeiting it
5
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Measurement understatement

Indirect Misrepresentation
-omitting adverse or unfavorable information about the product or service
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Caveat Emptor “Let the buyer beware”
2
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Passive deception

Persuasion:
Process of appealing to the emotions of a prospective customer and urging him to buy an item of
merchandise he needs
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Ethical Dilemma: a situation a person faces in which a decision must be made about the
appropriate behavior
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Obtain the relevant facts
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Identify the ethical issues from the facts
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Determine who is affected by the outcome of the dilemma and how each person or group
is affected
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Identify the alternatives available to the person who must resolve the dilemma
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Identify the likely consequences of each alternative
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Decide the appropriate action
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Prevention of Corruption
1
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3
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Clear Business Processes
Policy on Gifts and Entertainment
Declaration of Conflict of Interest
Convenient Corruption Reporting System

INITIATIVES TO IMPROVE BUSINESS ETHICS AND REDUCE CORRUPTION

INTEGRITY INITIATIVE CAMPAIGN
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A multisectoral campaign that seeks to institutionalize integrity standards among various
sectors of society- business, government, judiciary, academe, youth, civil society, church,
and media
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Integrity Initiative Secretariat: Makati Business Club (MBC) and the European
Chamber of Commerce of the Philippines (ECCP)
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To achieve this goal, consultations, roundtable discussions and public forums involving business
leader compliance officers, corporate governance experts, academics and practitioners from small
and medium enterprises to large companies
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•

serve as the company’s cultural cornerstones that can never be compromised, either
for convenience or short-term economic gain
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Permission-to-play Values
- reflect the minimum behavioral and social standards required of any employee
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CODE OF CONDUCT
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Formal expression of the organization’s values and ethics
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PERSONAL CODE OF CONDUCT
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Is profoundly personal and relates specifically to the person
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UNIFIED CODE OF CONDUCT FOR BUSINESS (INTEGRITY INITIATIVE)

Purpose:
1
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2
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It articulates the belief that securing profit at the expense of
integrity is an unacceptable and way of conducting business and that measures have been taken to
enforce and cultivate integrity habits within the signatories’ respective organizations
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Our officers strongly communicate our organization’s position against bribery, corruption,
and unethical business practices within the company and the broader public; comply with
all the requirements of government regulatory bodies; and prohibit cover-ups and falsified
reports that conceal improper transactions
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Human Resources
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We strive to instill a culture of integrity among our employees
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In the spirit of fairness and due process, all employees have the right to file and respond to
complaints against practices suspected to be illegal or unethical
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Employees filing complaints will be protected from all types of retaliation, while those
involved in unethical practices will be subject to commensurate disciplinary actions
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Sales and Marketing
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We clearly communicate rules and guidelines on giving/receiving gifts, entertainment,
tokens of hospitality, and contributions to/from public and private organizations and their
representatives
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We abide by existing laws when transacting with government agencies (as stipulated under
RA 6713 – Code of Conduct and Ethical Standards for Public Officials and Employees and
RA 3019 – Anti-Graft and Corrupt Practices Act)
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Our financial records conform to standard accounting principles, comply with Securities
and Exchange Commission requirements on disclosure and transparency, and abide by
anti-money laundering laws (RA 9160) and international conventions
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Procurement
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A track record of integrity and compliance with existing laws is a prerequisite when we vet
third party consultants, suppliers, intermediaries, and agents
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Recognizing that the Integrity Initiative is sustained through widely shared ethical practices
within the business community, we enter into integrity pacts with our suppliers and ensure
that they comply with the provisions of our pact
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Logistics
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We comply with laws and regulations pertaining to supply chain management
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We pay correct duties and taxes based on transparent
assessments of goods and services
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Implementation and Monitoring
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We will continually strive to align our operations to the principles contained in this Code
and periodically assess and monitor our compliance to it
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CODE OF ETHICS FOR THE PHILIPPINES BUSINESS
ISSUED BY THE BISHOPS BUSINESSMEN’S CONFERENCE PHILIPPINES
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Some Principles for the Conduct of Business

Those responsible for business policy should consider not only the interest of the owners of
the business, but also the interest of those affected by the activities of the business which are
the ff:
❑ Employees
❑ Customers

❑ Suppliers
❑ Local and National Government
❑ Society in General

Laws advocating business ethics
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RA 7394 “The Consumer Act of the Philippines”

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RA 3720 “The Food, Drug, and Cosmetics”

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RA 8293 “The Intellectual Property Code of the Philippines

RISK MANAGEMENT
-is the process of measuring or assessing risks and developing strategies to manage it
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These threats, or risks, could stem from a wide variety of sources, including financial uncertainty,
legal liabilities, strategic management roles, management errors, accidents, and natural disasters
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Risk management plan will help a
company establish procedures to avoid potential threats, minimize their impact should they occur,
and cope with the results
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Furthermore, strong corporate governance principles that focus specifically on risk management
can help a company reach its goals
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❑ Increases the stability of business operations while also decreasing legal liability
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❑ Protects all involved people and assets from potential harm
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RISK MANAGEMENT PROCESS
1
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Understand the circumstances in which the rest of the process will take place
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2
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The company identifies and defines potential risks that may negatively influence a specific
company process or project
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Risk analysis
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The goal of risk analysis is to understand each specific instance of
risk further and how it could influence the company's projects and objectives
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Risk assessment and evaluation
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The company can then make decisions on whether the risk
is acceptable and whether the company is willing to take it on based on its risk appetite
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Risk mitigation
During this step, companies assess their highest-ranked risks and develop a plan to alleviate them
using specific risk controls
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6
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The overall risk management process should also
be reviewed and updated accordingly
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Communicate and consult
Internal and external shareholders should be included in communication and consultation at each
appropriate step of the risk management process and regarding the process as a whole
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Risk avoidance
While the complete elimination of all risk is rarely possible, a risk avoidance strategy is designed
to deflect as many threats as possible to avoid the costly and disruptive consequences of a
damaging event
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Risk reduction
Companies are sometimes able to reduce the amount of damage certain risks can have on company
processes
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Ex
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3
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The risk could also be shared with a third party, such as a
vendor or business partner
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Risk retaining
Sometimes, companies decide a risk is worth it from a business standpoint, and decide to keep the
risk and deal with any potential fallout
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PROFIT> Cost of its potential risk

SEC REQUIREMENT RELATIVE TO ENTERPRISE RISK MANAGEMENT OF
PUBLICLY-LISTED CORPORATIONS
SEC Code of Governance Recommendations 2
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The risk management
framework should guide the Board in identifying units/business lines and enterprise-level risk
exposures, as well as the effectiveness of risk management strategies
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The board is
responsible for defining the company’s level of risk tolerance and providing oversight over its risk
management policies and procedures
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BOARD RISK OVERSIGHT COMMITTEE
-Should be responsible for the oversight of a company’s Enterprise Risk Management system to
ensure its functionality and effectiveness subject to a corporation’s size, risk profile, and
complexity operations
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-The Chairman should not be the Chairman of the board or of any other committee
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In managing the Company’s Risk Management System, the Company should have a Chief Risk
Officer (CRO), who is the ultimate champion of Enterprise Risk Management (ERM) and has
adequate authority, stature, resources and support to fulfill his/her responsibilities, subject to a
company’s size, risk profile, and complexity of operations
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Supervises the entire ERM process and spearheads the development, implementation,
maintenance, and continuous improvement of ERM processes and documentation;
b
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Collaborates with the CEO in updating and making recommendations to the Board Risk
Oversight Committee;
d
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Provides insights on the following:
i
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Risk measures reported are continuously reviewed by risk owners for effectiveness;
and
iii
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