BUSI 4601 Chapter Notes - Chapter 7: Whistleblower, Differential Association, Internal Control
3 May 2018
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Chapter 7: organizational factor: role of ethical culture and relationship
Corporate culture: share belief top managers have about how to manage
employee and conduct business
1. Sarbanes Oxley act
▪ Culture is codified in compliance return
▪ Require management to assess effectiveness of organization’s
internal control and external audit
▪ Force to adopt set of value that form part of culture
▪ Change in culture, not only in accounting
▪ Expose mismanagement/ fraud/ abuse/ theft
▪ Code of ethics for top financial officers
▪ Problem: people are too focus on risk or compliance and reporting,
don’t look at whole aspect
2. Dimension
▪ Concern for people: focus on well being
▪ Concern for performance focus on output/ employee productivity
Type of culture
▪ Apathetic: minimum concern for people and performance
▪ Caring: higher concern for people, lower concern on performance
▪ Exacting: higher concern for performance, lower concern on
people
▪ Integrative: higher concern for people and performance
Culture audit: assess organization value, reward ethical behavior
Compliance audit: use law/ legislation to create code and requirement
Value culture: use explicit mission statement to define core value of firm and
how one should be treated
3. Differential association
▪ People learn ethical behavior through interaction
▪ Support ethical decision making
▪ Superior have strong influence
▪ Employee use superior’s moral judgement to show loyalty
4. Whistle blowing
▪ Expose wrongdoing to company outsider
▪ Legal protection
▪ Illegal to retaliate whistle blower
Question to ask before engaging in whistle blowing
▪ Use internal opportunity?
▪ Examine policy and code?
▪ Personal issue?
▪ Deal with stress?
▪ Deal with consequences?
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