Dated back from the 1920s, the topic of business ethics was initiated with the concept of “living wage”. Through its evolution, business ethics has been realized as a parallel development with that of economy. Yet, the recent scandals in accounting fraud, environmental pollution, sweatshops, bribery, and defective products have alerted business people of their ethical decisions toward related stakeholders. The study of business ethics would help business people identify ethical issues and relevant approaches to resolve them.
People with good and strong personal ethical values remain a strong factor but these personal ethical values are not sufficient in making business ethical decision. Business people should justify whether the issues are ethical or unethical in their decision making and most importantly when making decision, business people should consider the judgment of the society toward the decision in order to avoid cases that the society would judge it unethical which would greatly affect the business goals of the organizations
Business ethics does bring about broad benefits to individuals, organizations, and the society. Starting from the smallest entity (individuals), organizations that take good care of employees by caring the working environment, working conditions, social welfare etc would increase the commitment of employees to the organization. They would tie their future to the future of the organization. When employees are well taken care of, they will in turn take care of the organization, serving customers better, and of course the results would be better profits for the organization.
Ethical organization would also increase the trust of the investors, investors would not reluctant to place their money into business with good ethics and code of conducts because they realize the link between ethics and financial performance, between business conduct and profits thus they will have a higher chance of returns. The highest benefit could ethical organizations bring about is their ability to give back to the community, the society in which the organization is operating.
Once the organization is running at decent profit, they are obliged to paying something back to the society by granting scholarship, relief fund or improving infrastructure, carrying out environmental protection programs etc. In conclusion, business ethics can help guide organizations to benefit from individuals such as employees, investors to companies (reputation of company) and the community or society as a whole.
In Vietnam, when Halong Bay was listed as the Natural World Heritage in 1994 and from 1994 to 1998, the site was threatened to be withdrawn from the Unesco’s list due to environmental pollution from boat companies that operated in the areas. Boats that carry travelers to tour the bay are not equipped with proper toilet facilities. Sewages are emptied directly to the sea.
The issue was alerted to the local authority and things have been improved to the extent that boat companies, tour operators, boat crew members have been realized the importance of environmental protection because their main source of income comes from tourists and if tourists boycott their companies or even decided not to go to Halong Bay, their life would be greatly affected. Business people there have understood that they cannot go all-for-profit but they need to balance the importance of profit and social responsibilities Question II:
The first ethical issue is about employee theft. The problem is that the value-added-tax system in Vietnam requires that all expenses above VND 100,000 need a red invoice (a term refers to VAT invoice). Because of this reason, some employees have been stealing money from companies by claiming the expenditures that are not expensed at all. Expenses that exceed VND 100,000 would be broken down into smaller amounts and these amounts will be stated in non-VAT tax invoices and those non-VAT invoices are not eligible for VAT returns.
To prevent this employee theft, possible solutions could be the implementation of one-invoice policy which requires the employees to present one invoice for one purchased service or item. Companies also require employees purchase items from suppliers that can provide a VAT invoice, failing to do so employees are not allowed to make any purchases from that supplier The second problem facing business organization is the price collusion in which salespersons would agree a higher selling price with customers than the actual price the salespersons could sell a particular product.
They would collect the payment from clients, keep the difference and surrender the amount that they report to the company. This is also a kind of employee theft that business organization should be aware of. Some solutions applied are: (1) Salespersons are required to present all correspondences with clients in writing (emails, faxes or written contracts) instead of verbal communication by phone or by meeting directly with clients and (2) to encourage clients to make payment via bank transfer instead of by cash. These issues have proved to effectively eliminate any possible unethical acts committed by employees
The third ethical issue is a situation. When we were on board a cruise on the Mekong River. After an enormous dinner, we were having some drinks over chatting and we suddenly we saw that one of the crew members were clearing the table and starting to dumpling the waste into the river. We suddenly stopped him from doing so and explained to him that he needed to separate the waste into organic and inorganic waste and of the organic waste such as fish bones, crab shells, shrimp shells and other leftovers from water creatures that can be dumped into the river.
Others inorganic waste such as plastic bags, papers should not be thrown into the river because it would pollute the environment and if the media catch us polluting the environment, they can make it public and that would create a negative impact on our business. For this situation, we realized that it is important to educate, to get the ethical messages across all levels of the company Question III:
The Sarbanes-Oxley Act (SOA) was passed in 2002 after some famous accounting scandals commited by hundreds of small and big companies, the act had added to the current existing institutionalizations of business ethics such as laws regulating competition, laws protecting consumers, and laws promoting Equity and Safety etc. The SOA can somehow be understood as laws protecting investors and other stakeholders and it created the Public Company Accounting Oversight Board whose major duties are:
Registration of public accounting firms: Public accounting firms need to register with the Board in order to be legitimate in the preparation or issuance of any audit reports 2. Inspection of accounting firms: The Board shall conduct periodical inspection to assess the compliance level of the registered public accounting firms 3. Investigations, disciplinary proceedings, and imposition of sanctions: A registered public accounting firm may be investigated if found to violate any provision of the SOA.
Any disciplinary proceedings or imposition of sanctions should be applied if any violations are found and some of the sanctions are revocation of registration, civil money penalties, and temporary or permanent limitations on the activities, operations of such firm These duties are more or less related to my current job in Vietnam. Although the legal system between the US and Vietnam is different, these duties serve as guidelines in term of consistent compliance to prevailing laws and regulations.
Annually, we need to contract an auditing company to audit our annual financial reports and we usually choose the auditing company who has clean history of doing business, abides the Vietnamese Auditing Standards (VAS) promulgated by the Ministry of Finance. There is no such kind of Oversight Board in Vietnam yet thus it is important for the accountant team to generate financial reports in conformity to the accounting principles from the first stage so as to reduce any possible errors that can be spotted by the auditing firm.