Governance, Business Ethics, Risk Management and Internal Control
INTRODUCTION TO ETHICS
Ethics – is a set of moral principles or values that govern the actions and decisions of an
individual or group.
Examples of prescribed set of values at the implementation level include laws and
regulations, church doctrine, code of business ethics for professional groups such as CPAs, and
codes of conduct within an individual organization.
It is common for people to differ in their moral principles or values. Even if two people
agree on the ethical principles that determine ethical behavior, it is unlikely that they will agree
on the relative importance of each principle. These differences result from all of our life
experiences. Parents, teachers, friends and employers are known to influence our values, but so
do television, team sports, life successes and failures, and thousands of other experiences.
CHARACTERISTICS AND VALUES ASSOCIATED WITH ETHICAL BEHAVIOR
✓ INTEGRITY – Be principles, honorable, upright, courageous and act on convictions; do
not be twofaced or unscrupulous or adopt an end-justifies-the means philosophy that
ignores principle.
✓ HONESTY – Be truthful, sincere, forthright, straightforward, frank, candid; do not
cheat, steal, lie, deceive or act deviously.
✓ TRUSTWORTHINESS AND PROMISE KEEPING – Be worthy of trust, keep
promises, full commitments, abide by the spirit as well as the letter of an agreement; do
not interpret agreements in an unreasonably technical or legalistic manner in order to
rationalize noncompliance or create excuses and justification for breaking commitments.
✓ LOYALTY (FIDELITY) AND CONFIDENTIALITY – be faithful and loyal to
family, friends, employers, client and country; do not use or disclose information learned
in confidence; in professional context, safeguard the influences and conflicts of interest.
✓ FAIRNESS AND OPENNESS – Be fair and open-minded, be willing to admit error
and, where appropriate, change positions and beliefs, demonstrate a commitment to
justice, the equal treatment of individuals, and tolerance for acceptance of diversity; do
not overreach or take advantage of another’s mistakes or diversities.
✓ CARING FOR OTHERS – Be caring, kind and compassionate; share, by giving, be of
service to others; help those in need to avoid harming others.
✓ RESPECT FOR OTHERS – Demonstrate respect for human dignity, privacy, and the
right to self-determination of all people; be courteous, prompt and decent; provide others
with the information they need to make informed decisions about their own lives; do not
patronize, embarrass, or demean.
✓ RESPONSIBLE CITIZENSHIP – Obey just laws; if all law unjust, openly protest it;
exercise all democratic rights and privileged responsibly by participation (voting and
expressing informed views), social consciousness, and public service; when in a position
of leadership or authority, openly respect and honor democratic processes of decision
making, avoid unnecessary secrecy or concealment of information, and assure that others
have all information they need to make intelligent choices and exercise their rights.
Page 1 of 3
Governance, Business Ethics, Risk Management and Internal Control
✓ PURSUIT EXCELLENCE – Pursue excellence in all matters; in meeting your personal
and professional responsibilities, be diligent, reliable, industrious and committed;
perform all task to the best of your ability, develop and maintain a high degree of
competence, be well informed and well prepared; do not be content with mediocrity; do
not “win at any cost”.
✓ ACCOUNTABILITY – Be accountable, accept responsibility for decisions, for
foreseeable consequences of actions and inactions, and for setting an example of others.
Parents, teachers, employers, many professionals and public officials have a special
obligation to lead by example, to safeguard and advance integrity and reputation of their
families, companies, professions and the government itself; an ethically sensitive
individual avoids even the appearance of impropriety, and takes whatever actions are
necessary to correct or prevent inappropriate conduct of others.
WHY IS ETHICAL BEHAVIOR NECESSARY?
✓ For a society to function in an orderly manner.
✓ The need for ethics in society is sufficiently important that many commonly held ethical
values are incorporated into laws
✓ A considerable portion of ethical values of a society cannot be incorporated into laws
because of the judgmental nature of certain values (cheating, stealing, deceiving, lying)
and those that deal with many aspects of principles (integrity, loyalty, pursuit of
excellence) but are important for an orderly society.
✓ Business decisions influence employees, customers, suppliers and competitors, while
company operations affect communities, governments and the environment.
WHY DO PEOPLE ACT UNETHICALLY?
✓ The person’s ethical standards are different from those of society as a whole, or
✓ The person chooses to act selfishly
CATEGORIES OF ETHICAL PRINCIPLES
Principles of Personal Ethics include
✓ Basic justice, fairness
✓ Respect for the right of others
✓ Concern for the right of others
✓ Concern for the well-being on welfare of others
✓ Benevolence, trustworthiness, honesty
✓ Compliance with the law
Professional Ethics include among others
✓ Integrity, impartiality, objectivity
✓ Professional competence
✓ Confidentiality
✓ Professional behavior
✓ Avoidance of potential or apparent conflict of interest
Page 2 of 3
Governance, Business Ethics, Risk Management and Internal Control
Business Ethics include among others
✓ Fair competition
✓ Global as well as domestic justice
✓ Social responsibility
✓ Concern for environment
THE NEED FOR PROFESSIONAL ETHICS
All recognized professions have several common characteristics: Most important
characteristics:
✓ a responsibility to serve the public
✓ a complex body of knowledge
✓ standard of admission to the profession
✓ a need for public confidence
CODE OF GOVERNANCE FOR THE PROFESSION IN THE PHILIPPINES (E.O. No.
220, June 23, 2003)
This Code is adopted by the PRC and the 42 Professional Regulatory Boards to cover an
environment of good governance in which all Filipino professionals shall perform their tasks.
General Principle of Professional Conduct
Professional are required not only to have an ethical commitment, a personal resolve to
act ethically, but also have both ethical awareness and ethical competency. Ethical awareness
refers to the ability to discern between right and wrong, while ethical competency pertains to the
ability to engage in sound moral reasoning and consider carefully of alternative actions.
Specific Principle of Professional Conduct
✓ Service to Others
✓ Integrity and Objectivity
✓ Professional Competence
✓ Solidarity and Teamwork
✓ Social and Civic Responsibility
✓ Global Competitiveness
✓ Equality of All Professions
- - - end - - -
Page 3 of 3
