Having an ethical culture in your organization is a foundation for effective internal control. All auditors are aware that internal controls are necessary for making sure that the company complies with applicable laws, rules, and regulations to make sure that there is a system of checks and balances for detecting any inappropriate transactions. If you do not have a culture of compliance and ethics, people end up finding ways of circumventing internal controls, procedures, and policies. An ethical audit is conducted to ensure that your employees will opt for doing the right thing to ensure that the company values are embedded in day-to-day procedures. Here are ways of conducting ethical audits and have an ethics program to build better ethics in the organization.
1. Clear company values
Any business must have clearly stated values for maintaining its culture of compliance and ethics. Different values that are responsible for shaping the ethical culture of an organization via daily work practices may include respect, integrity, safety, diversity, creativity, conscientiousness, and more such things. For example, safety can be the number one value of an organization. Although this may be an obvious choice, for people working in manufacturing, nuclear power plants, and construction sites where dangerous hazards are prevalent this is necessary. Therefore, safety can be the topmost value for most ethical audits and must be prioritized for employee’s daily work practices.
2. Code of ethics
These values you have selected in the first step have to be incorporated into the organization’s code of ethics. These are the guidelines about various principles and behavior that governs decision-making and the code of conduct. Code of conduct applies your code of ethics to various situations and actions. Both these documents have to include guidelines about ethics and compliance risk sectors. For any code of conduct to be useful for guiding day-to-day work practices it has to provide direction to the staff about applying a code of ethics in specific areas that are significant to your company. However, having a formal code of conduct does not guarantee real-world compliance. An audit can assess if these documents are understood by the employees.
3. Risk assessment
After your organization has established a code of ethics that employees comprehend and believe in, the next step will be finding out compliance risks and also the risks in the implementation of code of conduct guidelines. For achieving this you need to complete a risk assessment to make sure that your organization is concentrating on prevalent business risks as a result of changes taking place in the company, laws, and regulations, and business practices. As you are performing risk assessment for every business unit for compliance with laws and regulations ensure that you are including problems that arise due to code of conduct such as anti-bribery or anti-kickback.
4. Communication program
Have a communication plan in place for increasing ethics awareness among your employees and remind them that ethics and compliance are significant for the business. A more effective communication program will engage all audiences and deliver messages about ethics by using different kinds of media. If you can have a strong communications program for company ethics and compliance, it will remain on top of the mind of all your employees.
5. Assessment and evaluation after the program
During every point in the implementation of ethics and compliance culture, it is significant that you have continuous program evaluation. You can hire a pro ethical auditor to perform an ethical sourcing audit that can measure the values of your organization and decide who is doing well in these areas. There have to be continuous internal and external ethics audits for assessing how the internal controls were tested. You can perform employee surveys and use focus groups for assessing employee impressions of this ethics and compliance culture. You need continuous vigilance and evaluation for maintaining a strong ethics culture.
The development of a culture of ethics and compliance begins at the top. However, it is also a fact that most employees working in an organization will never get to see the CEO. For these people, ethical culture means what they see each day at work. The right message for ethical conduct must flow from top leadership onto lower-level supervisors that directly manage the business activities on an everyday basis and from them onto all employees.