Business Company Ethics

Business Company Ethics

Standards of business ethics

The foundation of a company is in business to produce a reasonable return for the shareholders. In doing so, the company’s assets must be used sensibly and must convey on the pledge to its customers, partners, and employees. These are the primary business ethics principles that guide a company’s conduct and choices. It provides the standards for businesses to execute the right thing for the shareholders, each other, and their country. Most companies have earned a superb reputation for the way they conduct business. A business or organization needs to sustain that reputation by adhering to the principles of integrity, honesty, and respect (Boatwright, 2006).

When one talks about business ethics, they refer to the commitments that make a company great. Corporations should deal fairly with their customers, suppliers, and competitors, as well as with each other. According to Barth (2003), each company should strive to be:

  • Law abiding;
  • Honest and trustworthy;
  • Responsible and reliable;
  • Fair and accommodating.

When one talks about compliance, they refer to the laws, rules, regulations, and policies that control and direct both their actions and those of their respective company. In 2002, the Sarbanes-Oxley Act was signed into law by George W. Bush. Acclaimed as the most considerable alteration to securities laws since the 1934 Securities Exchange Act, the Act includes broad changes for providers of publicly traded securities, auditors, corporate board members, and lawyers. It assumes strong innovative requirements proposed to discourage and penalize corporate and accounting fraud and corruption, threatening stern consequences for offenders, and protecting the wellbeing of workers and shareholders. According to Barth (2003), designed to advance the overall superiority of financial reporting, independent audits, and accounting services for public companies the Act does the following:

  • Develops an Accounting Oversight Board to enforce professional standards, ethics, and competence for the accounting profession;
  • Bolster the independence of firms that audit public companies;
  • Enhances corporate responsibility and value or corporate financial disclosure;
  • Raises penalties for corporate misconduct;
  • Guards the neutrality and independence of securities analysts; and
  • Amplifies Securities and Exchange Commission resources.

Many companies or corporations conduct business in the United States as well as in foreign countries. Many people of the workforce are citizens of different countries and belong to diverse cultural groups (Boatwright, 2006). Companies are subject to the laws and policies of the United States, its states and municipalities, as well as the laws of the countries where business is conducted. International

existence subjects companies to the rigid and legal control of many jurisdictions at the same time. In some occasions, there may be a genuine or obvious conflict between the laws of two or

more countries. In that occurrence, one must attain legal advice at once to understand how to resolve the conflict appropriately. Companies must abide by limitations concerning the import and export of their products, and information. When working overseas, a company will run into foreign rules, regulations, business customs, manners, and cultures. It is imperative for all companies who conduct business overseas to become familiar with other countries’ commercial practices, so that they don’t humiliate their company (Cantrell, 2007). When conducting worldwide business, it may be normal to accept gifts of substantial value. The U. S. Foreign Corrupt Practices Act forbids giving anything of value to a foreign official for the intention of unacceptably manipulating an official conclusion. It also prohibits unlawful political contributions to acquire or retain business overseas. Finally, this Act prohibits the use of false records or accounts in the conduct of foreign business.

Certain regulations oversee how companies conduct their business on a daily basis. Antitrust laws forbid agreements that eradicate or discourage competition. Defiance of these laws carries both hard economic fines and confinement terms. Companies must abide by completely with all federal, provincial, and state antitrust laws.

Businesses should be devoted to reasonable and competitive sales practices. They should not engage in practices that would unlawfully limit trade or prohibit competitors from the marketplace. Businesses should not converse formally or informally with competitors to secure or manage prices, distribute markets, prohibit customers, or limit the sale of products. Companies should not compose inaccurate statements regarding their competition, nor plan to gain or utilize their proprietary information unacceptably.

Conflicts of interests are a major concern for many large, competitive businesses today (Boatwright, 2006). A conflict of interest occurs when one’s confidential interests interfere in any way with the interests of a company. A company manager should base business assessments on their company requirements, rather than their personal interests or the interests of family or friends (Cantrell, 2007). One should not do business with companies in which they have a significant financial interest.

Managers within a business may discover material information related to the company or other companies before the general public recognizes such information. This type of information is described as “insider” information. According to Cantrell (2007), it is illegal for one to buy or sell stock based on this type of information or to send this information on to someone else for them to purchase the stock until that information has been publicly circulated. The best method to know if information is public is to see it in the newspaper or on television.

According to Barth (2003), when conducting business overseas, one has the following responsibilities:

  • Keep up-to-date with the relevant United States and foreign laws above the work;
  • Identify and obey the laws concerning export and import of products, technical data and services.

Many federal, state, and foreign agencies control how companies conduct their business (Cantrell, 2007). Businesses must conform determinedly with the requirements of these agencies. All employees of a company or business should comply with internal and external audits. For the duration of an audit, never destroy or modify any documents, lie to or deceive an auditor, or hinder the gathering of information. Always maintain precise records of all financial and business transactions. Accurate record-keeping is essential to ensure that all costs

are properly charged. According to Boatwright (2006), it is a company’s duty to record all costs accurately and to follow all accounting procedures as set forth by Generally Accepted Accounting Principles (GAAP). GAAP is the standard framework of guidelines for financial accounting. There should not be any phony or deceptive entries in the accounting books or records. Public opinion is vital to long-lasting corporate achievements (Cantrell, 2007).

Companies must also obey all facets of the U. S. Anti-Kickback Act. Members of the workforce must never offer, give, ask for, or take any form of bribe or kickback. A bribe or kickback is the giving or accepting of money, fees, commissions, credits, gifts, favors, or anything of value that is either directly or in some way offered in return for complimentary treatment.

A company’s billing and pricing should be valid and accurate. The prices should reflect the cost to design and produce the products, level of effort, market conditions, and other relevant factors. Invoices must be clear and comprehensible. Overpayments should be returned quickly upon discovery. All invoices to customers should be timely, accurate, and valid. The U. S. False Claims Act makes it unlawful to present to the government a false or fraudulent claim. According to Barth (2003), under the False Claims Act, 31 U.S.C. §§ 3729-3733, those who knowingly submit, or cause another person or entity to submit, false claims for payment of government funds are liable for three times the government’s damages plus civil penalties of $5,500 to $11,000 per false claim. A company must never improperly transfer costs between contracts or projects.

According to Barth (2003), when engaged in billing and pricing, a company has the following responsibilities:

  • Be precise in pricing;
  • Bill correct projects;
  • Do not divide invoices to conceal costs or circumvent procedures;
  • Make certain bills are valid, timely, and inclusive.

Workforce employee information is confidential and should only be used for legitimate business purposes (Boatwright, 2006). This comprises of personnel file information, medical records, and home addresses. Companies should randomly and periodically inspect computers, telephone records, lockers, e-mail, files, business documents, and workplaces. The workforce should not expect privacy when using company-provided services or equipment. The random and periodic checks helps to ensure that confidentially is being kept and that the staff is complying with company policies and procedures. Businesses are based on information. One may have access to

sensitive, confidential, or proprietary information about their customers and others with whom we do business. A business earns the trust of their customers by protecting the privacy of their information.

In conclusion, compliance with the standards of business ethics and conduct will ensure a more positive perception by the public and will mitigate potential risks associated with non-compliancy. Standards and laws are put in place to make sure the playing field is even and that no one has a bigger advantage by breaking the rules. Standards will provide a foundation for a company to be successful and prosper. Without standards, there are risks of bad public opinion, lack of trust with customers, and stringent penalties.


Cantrell, W (2007) High-Performance Ethics.New York: Tyndale House Publishers

Boatwright, J. R. (2006) Ethics and the Conduct of Business (5th ed.). New York: Prentice Hall

Barth, S. (2003) Corporate Ethics: The Business Code of Conduct for Ethical Employees Boston: Aspatore Books

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