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Ethics Auditing

Nearly all financial audits and investigations are built around things that can be measured objectively and quantitatively. Whether it is financial records, specific violations, business reports, or various other things, most audits pertain to easily measurable and quantitative data. However, one area that differs from this is ethics audits. Unlike many other type of audits, ethics audits tend to involve subjective and difficult to measure aspects. Because of this, ethics audits pose a particular challenge to the investigator.

Despite the unusual and challenging nature of ethics audits, they are very important. Ethics audits are simply investigations into how well a company is handling ethical issues. These can include things like how fairly employees are being treated, the safety of the work place, how honest the company is with customers, as well as many other issues. While dealing with these issues is often difficult and complicated, investigators can still succeed in carrying out an ethics audit if they are careful and thorough, considering and incorporating a wide range of perspectives.

The first step for ethics auditing is understanding and reviewing the company’s written materials pertaining to ethics. Generally, this will be in a form of an employee handbook and ethics training seminars for employees. These resources are critical because they reveal a commitment (or lack thereof) by the company to maintain a strong ethical environment, and they lay a groundwork for the investigator to find areas in which the company is not meeting their stated ethical goals.

Once this initial review is completed, the next step is to look for major ethical failings the company has had in the past. Discussing with an executive about legal or ethical issues is a good starting point. This can be followed up by searching through company records and news sources for any additional issues. By combining this information, a picture of the past and current ethical issues within a company can begin to be formulated. If any ethical lapses are discovered through this process, it is probably worth following up with the executive to discuss how the company is seeking to grow from their mistakes and ensure the issue does not reoccur.

One additional thing to look for during this process is anything that the executive may have been trying to conceal. If news sources reveal issues that were avoided by the company representative, that is often a strong indicator of a dishonest culture within the company.

The next step in this process is to discuss the ethics of the company with the employees of the company. Employees will often have specific information that is not readily available otherwise. It is important in this step to ensure that the employees know their answers are confidential and will not be shared with others. This will allow them to have the freedom to share information that can be vital to a successful audit. Throughout this step, the investigator should look for patterns of responses, as this will point to larger issues that are present within the company. As patterns begin to emerge, they can often be quantified statistically by recording what percentage of employees spoke about specific issues.

This process plays an important role in creating an accurate picture of a company’s ethical issues, and can allow the company to see ethics shortcomings and ways to improve. For example, the American pet supply company Petco has worked hard over the past several years in an effort to improve on previous ethical failings in their treatment of animals. After facing severe criticism, Petco underwent significant rebranding efforts, which were largely built upon internal ethics audits which revealed shortcomings and areas for improvement within the company. Since putting this emphasis on ethical behavior in place, the company has experienced increased positive public relations.

Because of their nature, ethics audits can be very difficult, and may at times seem less valuable than other forms of audits or reviews. However, for businesses and employees, and the consumers they serve, ethical issues are incredibly important. By reviewing these issues, investigators and companies can play a major role in enabling people and businesses to handle ethical challenges in more beneficial ways.

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