Tag: Role Play and Simulation

Financial statements or accounts provide information that is used by interested parties to assess the performance of managers and to make economic decisions. Users may assume that the financial information presented in the financial statements or accompanying documents is reliable and fit for its purpose.

Accounting laws and regulation attempt to ensure that reliable, consistent and timely information is produced and disseminated to the intended users. That is the principal reason for having a broadly consistent and coherent set of accounting standards throughout the globe.

The term ‘creative accounting’ can be defined in a number of ways. Initially we will offer this definition; ‘a process whereby accountants use their knowledge of accounting rules to manipulate the figures reported in the accounts of a business’.

They are characterised by excessive complication and the use of novel ways of characterizing income, assets or liabilities. This results in financial reports that are not at all dull, but have all the complication of a novel by James Joyce, hence the appellation “creative.” Sometimes the words “innovative” or “aggressive” are used.

Creative accounting, which generally involves the preparation of financial statements with the intention of misleading readers of those statements, is prima facie a form of lying.

It examines and rejects the arguments for considering creative accounting, in spite of its deceptive intent, as not being a form of lying. It then examines the ethical issues raised by creative accounting, in the light of the literature on the ethics of lying.

The Importance of applying creative accounting are:       

• Obtaining personal gain
• Competition
• Attracting investors
• Increasing or maintaining the level of capital or gearing ration
• Avoid breaching loan covenants
• Buying time for not settling debts
• Beating analysts’ forecasts about future company performance
• And others

Methods:

Wrong Estimation of Inventory in Stores

Some companies’ management does this type of practice to overstate the inventories’ valuation. They do this to show that their cost of goods sold is understood and thus tries to show the increased profits their company will earn this year.

Failures to Make Proper Contingent Liabilities

It is a very technical method of creative accounting. The contingent liabilities are not shown properly in the notes to accounts; thus, it will give the impression that the company is not having any liability and thus is free from that.

Booking Less Expense

To show lower expenses, the company sometimes makes client payments by cash or an outdated cheque. It helps the management book the lower expenses per year, and their books of accounts will depict the fewer expenses figure, which may attract some investors.

Willfully Attempting to Manipulate Depreciation Figures and Methods

Many companies use this technique to make a good impression on their investors. The depreciation calculation method is sometimes changed by simply giving a disclaimer. No estimation increases the lifespan of the assets. The management attempts to set an arbitrary life span, usually more than expected. It thus can have a less depreciation calculated on the above and corresponding to that increases the salvage value of the assets company’s assets. Although depreciation is cashless, the calculation of the same greatly impacts the company’s finances.

Lowering Personal Liabilities of the Company

A company does not usually tend to show its liability, so it is also a great creative accounting technique.

Manipulating Revenues and Sales Figures

It is a very basic thing most companies are doing. Sometimes they lower the sales revenue in their books to get rid of taxes, and sometimes they increase the sales figure with some arbitrary transaction to show the company’s revenue to encourage their investors.

Advantages

• Creative accounting helps the company set the required parameters, which is practically impossible.
• The company can show a smooth and good growing graph of the company. The management adopts this technique to show steady profits and good revenue to attract investors.
• The company that makes losses can benefit from this creative accounting. Investors can be hopeful by seeing the future gains in the companies’ budgeted accounts, and often the company can cope with the situation.
• By adopting this method, the company can conceal the financial risk they may tend to suffer.

Disadvantages

• The company will always be at a high risk of losing its investors because in case the investors get to understand the manipulations, it will not be good for the company. The investor’s interest might get hampered.
• Although creative accounting is an ethical practice, sometimes it may be treated as illegal. When the values of the books of accounts are unethically or illogically misrepresented, it can call for some qualifications.
• The biggest disadvantage is that if an expert does the manipulation, it is fine, but if not, so the literate financial director or CEO decides to make a change, it will be a problem. Therefore, this may add to the cost of hiring a financial expert.
• In the long run, if it is disclosed that the company does a creative accounting practice, then the expectation from the company by their clients will also be at risk; thus, the company may lose its business.

Earnings management is the use of accounting techniques to produce financial statements that present an overly positive view of a company’s business activities and financial position. Many accounting rules and principles require that a company’s management make judgments in following these principles. Earnings management takes advantage of how accounting rules are applied and creates financial statements that inflate or “smooth” earnings.

Earnings management has a negative effect on earnings quality, and may weaken the credibility of financial reporting. Furthermore, in a 1998 speech Securities and Exchange Commission chairman Arthur Levitt called earnings management “widespread”. Despite its pervasiveness, the complexity of accounting rules can make earnings management difficult for individual investors to detect.

Accounting fraud is the intentional manipulation of financial statements to create a false appearance of corporate financial health. Furthermore, it involves an employee, accountant, or the organization itself misleading investors and shareholders. A company can falsify its financial statements by overstating its revenue, not recording expenses, and misstating assets and liabilities.

Motivations and methods

Earnings management involves the manipulation of company earnings towards a pre-determined target. This target can be motivated by a preference for more stable earnings, in which case management is said to be carrying out income smoothing.[6] Opportunistic income smoothing can in turn signal lower risk and increase a firm’s market value. Other possible motivations for earnings management include the need to maintain the levels of certain accounting ratios due to debt covenants, and the pressure to maintain increasing earnings and to beat analyst targets.

Earnings management may involve exploiting opportunities to make accounting decisions that change the earnings figure reported on the financial statements. Accounting decisions can in turn affect earnings because they can influence the timing of transactions and the estimates used in financial reporting. For example, a comparatively small change in the estimates for uncollectible accounts can have a significant effect on net income, and a company using last-in, first-out accounting for inventories can increase net income in times of rising prices by delaying purchases to future periods.

Detecting earnings management

Earnings management may be difficult for individual investors to detect due to the complexity of accounting rules, although accounting researchers have proposed several methods. For example, research has shown that firms with large accruals and weak governance structures are more likely to be engaging in earnings management. More recent research suggested that linguistics-based methods can detect financial manipulation, for example studies in 2012 found that whether a subsequent irregularity or deceptive restatement occurred is related to the linguistics used by top management in earnings conference calls.

Earnings Management Approaches

Companies use several strategies used for earnings management. The most commonly used strategies are as follows:

Biased accounting judgments

Accrual accounting presents opportunities for earnings management; however, a company’s management needs to exercise some difficult judgments when accrual accounting is applied.

There are formal policies, accounting manuals, and processes followed at well-performing companies to ensure that the judgments are bias-free. Earnings management happens when the management team distorts judgments and mends policies to meet expectations.

Earnings-focused decisions

Decisions taken by the management are solely focused on meeting earnings estimates. The easiest way for earnings management is to control the company’s expenses. Companies look to cut any optional expenses to meet earnings estimates.

Certain activities: such as research, advertising, or staff training can be suspended temporarily. Companies suspend such activities for a short time, assuming that the business will perform better in the upcoming periods, and the suspended activities can be resumed thereafter.

However, for companies that are performing well, the management focuses on the long-term success of the business and does not usually resort to artificially enhancing the earnings.

Altering accounting principles

The management of well-run companies chooses the accounting rule that best reflects the implicit economic factors. Earnings management happens when a company’s management selects an alternative of a certain accounting standard, which will cause the earnings number to meet the expectations.

Techniques of Accounting fraud:

Overstating Revenue

A company can commit accounting fraud if it overstates its revenue. Suppose company ABC is actually operating at a loss and not generating enough revenue. To cover up this situation, the firm might claim to be producing more income on financial statements than it does in reality. On its statements, the company’s profits would be inflated. If the company overstates its revenues, it would drive up the firm’s share price and create a false image of financial health.

Unrecorded Expenses

Another type of accounting fraud takes place when a company does not record its expenses. The company’s net income is overstated, and its costs are understated on the income statement. This type of accounting fraud creates a false impression of how much net income a company is receiving. In reality, it may be losing money.

Misstating Assets and Liabilities

Another form of accounting fraud occurs when a company overstates its assets or understates its liabilities. For example, a company might overstate its current assets and understate its current liabilities. This type of fraud misrepresents a company’s short-term liquidity.

The main objective of any business is said to be shareholders wealth maximization. In order to achieve this objective, the organization has to perform better than its competitors and create a competitive advantage for itself. This competitive advantage is mainly dependent upon the perception the customers hold of the products or services of the organization. An organization can create a competitive advantage by means of its marketing decisions, behavior, and practices. This includes aligning its marketing mix as per the customers’ requirements. The organization will gain a competitive advantage only when the customer will perceive the marketing mix i.e. product, price, place, and promotion to be of value.

The focus has increased towards being ethical in marketing practices mainly due to two reasons. First, when an organization works ethically, the customers tend to develop more positive perceptions and attitudes towards its products and services and the organization as a whole. This leads to a long-term positive relationship with the customers. When the marketing practices of an organization depart from being ethical and the standards that are considered to be acceptable by society are not followed, the organization taints its own image. It may lead to bad publicity for the firm, dissatisfied customers, lost business, lack of trust, and in some cases even legal action.

Second, ethical abuses lead to pressure from either the society or the government for the firms to be more responsible. Since such ethical abuses do occur, people tend to believe that such marketing practices abound. As a result of this, consumer interest groups and some professional associations exert influence on marketing practices and keep them checked. An indicator of this is several regulations that have been designed just to protect the consumers rights.

Unethical practices to avoid:

False Advertising

You should be careful to avoid overstating the benefits that a product or service offers in your marketing and advertising communications, so as to steer clear of accusations of false advertising. Advertising is considered to be misleading if it misrepresents the value, uses, or outcomes of a product, utilising inaccurate information in its content to gain buyers’ interest. Although false advertising may be successful in drawing customers into the early stages of a sales funnel, it ultimately proves extremely harmful to consumer trust and influences long-term negative brand perception when shoppers inevitably feel disappointed and deceived.

Deceptive Marketing Practices:

Deception is making the customer believe in the value provided by the product/service which it actually doesn’t provide. It may take the form of misrepresentation or omission of key facts or misleading practices. This may also involve the omission of important terms and conditions of sale and bait-and-switch selling techniques in which a product/service is offered usually at a lower price and the customers are then encouraged to buy more expensive items. Selling potentially hazardous products without disclosing the dangers is also considered a deceptive and unethical marketing practice. There may also be packaging deception which is mislabeling regarding the content, weight, size, or use of the information of the product.

Unethical Product and Distribution Practices:

Several product-related issues, especially regarding the quality of products and services raise questions about ethical conduct in marketing. The most frequent complaints are voiced regarding the products which are of unsafe nature. Other than this, the problems are regarding the poor quality of product or service, product/service not containing what is promoted or the product/service becoming obsolete or going out of style before they are used. The company which is making products that are of poor quality or is potentially unsafe for its consumers may jeopardize its image and develop a reputation for poor quality products or services. It may also put itself in the situation of product claims or legal actions. Sometimes, however, the changes in the industry itself occur and the products become obsolete so fast that the consumers may misinterpret it as planned obsolescence e.g. in the computer industry.

Anti-Competitive Practices

There are various methods that are anti-competitive. For example, bait and switch is a type of fraud where customers are “baited” through the advertisements for some products or services that have a low price; however, the customers find in reality that the advertised good is unavailable and they are “switched” towards a product that is costlier and was not intended in the advertisements.

Another type of anti-competitive policy is planned obsolescence. It is a method of designing a particular product having a limited useful life. It will become non-functional or out of fashion after a certain period and thereby lets the consumer to purchase another product again.

Marketing Research and Benchmarking:

This is another area in which ethical questions may arise. Consumers and entities being benchmarked may consider it an invasion of their privacy. They are usually resistant to giving out personal information. However, in order to obtain correct and better data, researchers may act by unfair means. The same may happen in the case of benchmarking. In some cases, the questions may be modified in a way to gain information which the respondent would not be willing to share otherwise. Organizations have to impose ethical standards for themselves in such instances.

Pricing Ethics

There are various forms of unethical business practices related to pricing the products and services.

Bid rigging is a type of fraud in which a commercial contract is promised to one party, however, for the sake of appearance several other parties also present a bid.

Predatory pricing is the practice of sale of a product or service at a negligible price, intending to throw competitors out of the market, or to create barriers to entry.

“LCI attempt to takeover Asian Paints

• In October 1997, Asian India faced a strong takeover threat from the same ICI, backed by the financial might of its UK-based parent company ICI Plc, just 15 years after Swaraj Pauls’ failed takeover bid.
• Atul Choksey, Asian Paints’ public face until then, had thrown the company into disarray when he planned a secret arrangement to sell his 9.1 percent stake to ICI UK.
• Though three other co-founders opposed his sale to a foreign party and threatened to refuse to register ICI’s shares in the same fashion as Escorts and DCM.
• Ultimately, the government of India, through its Foreign Investment Promotion Board, (“FIPB”) thwarted the bid, ruling that foreign acquirers taking control of an Indian company needed first to obtain approval of the board of directors of the Indian target
• The remaining co-founders owned far more than ICI’s 9.1 percent interest and hence retained control of the company.
• The transaction failed to gain ICI board approval without the support of the other three founders, and as a result, ICI was obliged to sell its investment in Asian Paints to UTI, a government-owned mutual fund, and two other cofounders.”

“India Cements successfully takeover Raasi Cements

• The only hostile takeover in Indian history resulting in the ultimate acquisition of the target by the hostile bidder occurred in 1998 when BV Raju sold his 32% stake in Raasi Cements to India Cements.
• India Cements made an open offer for Raasi shares, and it acquired roughly 20% on the open market,” but faced resistance from the founders of Raasi as well as the Indian financial institutions which also owned substantial stakes in the firm.
• However, following a protracted battle which involved press conferences featuring the children and grandchildren of the founding family protesting the hostile bid, Raju ultimately sold out to India Cements in a privately negotiated transaction”.

Arun Bajoria vs Bombay Dyeing

• In 2000, Kolkatta-based Arun Bajoria bought 15% in Bombay Dyeing and threatened to make an open offer to public shareholders.
• He finally sold out his stake to the Wadias– the promoters of Bombay Dyeing–at a profit.

 “GESCO”

• The Dalmia group’s purchase and sale of its 10% stake in the real estate firm GESCO for an approximate 125% premium in 2000 are the closest India has come to greenmail.
• This hostile bid, for 45% of the company, was only averted thanks to a white knight recruited by the founding Sheth family, the Mahindra group, which offered to buy out the entire remaining float for an even higher premium
• After an intense bidding war that drove the initial offer price up roughly 100%, the Mahindra-Sheth group agreed to buy out the Dalmias’ 10% stake.”

RK Damani vs VST Industries

• In 2001, stockbroker Radhakishen Damani made an open offer for BAT-controlled VST Industries, but was foiled by ITC which entered the fray as a white knight, with support from BAT.
• Damani still holds 26% in VST.

Harish Bhasin vs DCM Shriram Industries

• In 2007, stock-broker Harish Bhasin bought 25% in DCM Shriram Industries through a combination of open market purchases and an open offer.
• The promoters countered the move by issuing warrants to themselves and increasing their stake.

Essel Group’s bid for IVCRL

• In 2012, Essel Group’s Subhash Chandra sought to control Iragavarapu Venkata Reddy Construction Limited (IVRCL), an infrastructure company.
• The promoters in the target company had only 11.2 per cent stake in IVRCL.
• Subhash Chandra’s Essel Group after acquiring 10.7 per cent stake in IVRCl, made a U-turn and decided to exit its shareholdings in the target company

“Mindtree Limited (“Mindtree”) acquired by Larsen and Toubro Limited (“L&T”)

• This was the second successful takeover after India Cement’s successful takeover of Raasi Cement in 1998.
• L&T, does not have any promoter, the promoters of the target, Mindtree, hold a mere 13.32 percent. Mindtree’s shareholding pattern presents a recipe for a hostile takeover in the Indian context.
• Siddhartha has been the largest shareholder of Mindtree with a 20.32 % stake, although he was not designated as a promoter. The takeover was activated when L&T entered into a share purchase agreement to acquire Siddhartha’s shares in Mindtree at a price of Rs 980 per share. Being less than the mandatory offer threshold of 25 percent as prescribed in the SEBI (Substantial Acquisition of Shares and takeover) Regulations, 2011, L&T would not have been obligated to make a mandatory offer.
• L&T also placed an order with a broker to purchase up to 15 percent shares of Mindtree on the market at a price not more than Rs 980 per share.
• It is L&T’s execution of the SPA coupled with its order to the broker that breached the 25 percent threshold, and hence L&T has announced a mandatory offer to Mindtree’s shareholders for an additional 31 percent shares at the price of Rs 980 per share, to be Paid in cash.
• L&T potentially had the option of making a voluntary offer after acquiring Siddhartha’s stake of 20 percent, but instead it decided to trigger the mandatory offer route by throwing in the market purchases through the broker into the mix.
• L&T has raised its stake to 25.94 percent and queries by the SEBI has resulted in postponing the open offer by L&T though it seems inevitable that the acquisition will proceed as contemplated”.

Original Article: https://www.linkedin.com/pulse/hostile-takeover-india-study-covering-statutory-cases-ayush-rastogi#:~:text=The%20only%20hostile%20takeover%20in,Raasi%20Cements%20to%20India%20Cements.

The importance of ethics in finance is well understood, at least in a general sense. Often, however, ethics are practiced in a rote, nonreflective way. Business leaders in the financial sector must move beyond simple compliance and rule-based consideration. Ethics in finance demands adherence to the highest standards.

The consequences of unethical behavior are clear, from loss of reputation and trust to monetary penalty and criminal prosecution. Effective leaders attend to an inner moral compass which helps minimize the temptation toward unethical behavior.

Scope:

1. Provides a moral code of standard

In the financial market, some barriers range from unequal information, misuse of power and resources, etc.

In such cases and those which involve third-party connections, there is a dire need for a proper code to be followed in the industry. From investment to trading to stock to economical activities of the corporate or finance system, all follow an ethical code in all their transactions

2. Ethics in finance channelizes confidence in business/corporate dealings

The main objective of the financial industry is to have direct dealings with the industry.

These directly connect to their clients in the form of product or service delivery where they look forward to winning their confidence.

Despite the primary objective to maintain a competitive stature in the industry, they must do so on ethical grounds. In addition to such practices, being ethically right will gives businesses good returns in the long term.

3. Ethics makes business/corporate behavior and activities harmonious

In the financial industry, we can expect many people to be part of an organization.

Since these have to work together at different levels and towards a similar core objective, there has to be a set of ethical rules and guidelines that have to be followed.

Principles and Standards

The Institute of Management Accountants outlines basic principles and standards for ethics in finance and business, an industry framework for ethical professional practice.

Principles:

• Honesty
• Fairness
• Objectivity
• Responsibility

Standards:

• Competence
• Confidentiality
• Integrity
• Credibility

Codes of Ethics in Finance

Different moral codes that are supposed to be followed the finance-related behavior of a company towards its employees, customers, public and other stakeholders:

• Acting with honesty and integrity while handling dilemmas of the world of finances.
• Not associating with any real/clear conflicts of interest in personal, or company relationships.
• Providing information that is full, accurate, fair, complete, relevant, objective, understandable, and timely in and for different documents and reports.
• Acting in accordance with all the applicable rules, laws, and regulations of governments along with other relevant public/private regulatory agencies.
• Acting responsibly and in good faith with due care, carefulness, and competence without any sort of misrepresentation of material facts.
• Respecting the confidentiality of information which is acquired in the business course and such information should not be used for the personal benefit.
• Promoting ethical behavior among all the associates and stakeholders of a company.
• Adhering and promoting a code of ethics in the company.

• Deliberate abnormal delays in payments to (a) Vendors, (b) Dealers commissions and promotion costs.
• Delays in paying wages, interest to financiers, incentive, bonus to employees.
• Holding up bills of vendors on silly reasons and ultimately buying from others to avoid payment to earlier vendors.
• Not prompt in statutory payments of ESI, PF, Sales Tax and Excise Duties.
• Cheating employees of their dues towards medical expenses, leave travel assistance, children education fees etc.,
• Opening of current accounts in different banks to avoid adjustments against loans by earlier banker.
• Creating bogus bills of purchase to show higher costs and hence losses to avoid bonus payment to employees.
• Collecting loans from private financiers at higher rate of interest to help kith and kin and to get kick-backs.
• Quick release of payments to known or adjustment parties and delaying payment to others.
• Taking private finance only from those who are ready to do personal favours to the finance department head.

The American Marketing Association is more than a steward and advocate of marketing ethics in society; right from its preamble, you might assume that the people who outlined the association’s ethics had some discerning mothers.

Unethical Data Collection

Market research is incredibly valuable for businesses throughout all stages of their operations; utilising accurate consumer data in the composition and execution of market strategies can greatly boost the effectiveness and ROI of promotional activities. Data collection must be conducted ethically, however.

You should carefully consider governmental data and privacy protection policies before embarking on market research activities, and ensure full compliance with these regulations. In Europe, businesses must refer to General Data Protection Regulation (GDPR), while companies registered in the US can utilise the nation’s own privacy protection laws.

Making false or deceptive comparisons about a rival product. Much more prevalent 20 years ago among general consumer products, you still might see this crop up in the tech sector. (Think smartphones.) Competition tends to be fierce when rivals resort to side-by-side comparisons. And consumers may find such a technique helpful, as long as the information is accurate and truthful.

Inciting fear or applying unnecessary pressure. “Limited time offers” are notorious for the latter, which is fine if a deadline really exists and the tone doesn’t sound threatening.

Exploiting emotions or a news event. Such instances pop up every once in a while, then make a quick exit when consumers complain about feeling manipulated.

Disparaging references to age, gender, race or religion. Many professional comics have learned the hard way that the line between humor and bad taste can be painfully thin. It might be easier to see if the humor packs an insult or a put-down that makes you grimace.

Doctoring photos or using photos that are not authentic representations. Most people expect professional photographers and videographers to make the most of lighting and close-ups. But the finished products should be accurate depictions that are free of touch-ups and other enhancement techniques that are designed to mislead.

Plagiarizing a competitor. For a small-business owner, discovering that a competitor has copied or impinged on a tagline, blog post or promotion can be painful or infuriating.

Stereotyping or depicting women as sex symbols merely to draw attention to a product. “While it might be intuitive to use models in adverts for beauty products and cosmetics, having half-naked models in adverts for generators, heavy machinery, smartphones and other products not strongly related to women is both nonsensical and unethical,” says Profitable Venture.

Selective Marketing

The practice of customer segmentation can become immoral if it results in selective marketing, a term that describes the exclusion of particular types of consumers, most commonly determined by their sexual orientation, ethnicity, weight, or physical mobility.

This selective marketing discourages demand among so-called ‘Undesirable‘ consumers who are considered to be unprofitable or damaging to the brand’s image, by making them feel unwanted and unwelcome, whether through lack of inclusion in marketing campaign representation, restricted customer targeting, or deliberate limitations of product ranges.

Professional ethics encompass the personal and corporate standards of behavior expected by professionals.

The word professionalism originally applied to vows of a religious order. By no later than the year 1675, the term had seen secular application and was applied to the three learned professions: divinity, law, and medicine. The term professionalism was also used for the military profession around this same time.

Professionals and those working in acknowledged professions exercise specialist knowledge and skill. How the use of this knowledge should be governed when providing a service to the public can be considered a moral issue and is termed “professional ethics”.

It is capable of making judgments, applying their skills, and reaching informed decisions in situations that the general public cannot because they have not attained the necessary knowledge and skills.[4] One of the earliest examples of professional ethics is the Hippocratic oath to which medical doctors still adhere to this day.

Separatism

On a theoretical level, there is debate as to whether an ethical code for a profession should be consistent with the requirements of morality governing the public. Separatists argue that professions should be allowed to go beyond such confines when they judge it necessary. This is because they are trained to produce certain outcomes which may take moral precedence over other functions of society. For example, it could be argued that a doctor may lie to a patient about the severity of his or her condition if there is reason to believe that telling the patient would cause so much distress that it would be detrimental to his or her health. This would be a disrespect of the patient’s autonomy, as it denies the patient information that could have a great impact on his or her life. This would generally be seen as morally wrong. However, if the end of improving and maintaining health is given a moral priority in society, then it may be justifiable to contravene other moral demands in order to meet this goal.  Separatism is based on a relativist conception of morality that there can be different, equally valid, moral codes that apply to different sections of society and differences in codes between societies. If moral universalism is ascribed to, then this would be inconsistent with the view that professions can have a different moral code, as the universalist holds that there is only one valid moral code for all.

Ethics commonly related to the moral principle or guideline that governs a person’s behavior or the conducting of activities. In general ethics knows as the branch of knowledge that deals with moral principles. In history of ethic, Thomas Percival (1740-1804) was published a code of medical ethics for physicians in 1794. He also creates the first code of ethics for professional ethics. The code is the first code of ethics to be adopted by a professional organization, AMA. Today’s, modern professions also adopted codes of ethics because it is a common standards, the minimization of the interpersonal strife that the emphasis on individual honor encourages. Ethic also as a framework of weal that permits professionals to assert their independence of their nominal employers in the name of service to other.

Professional is a person that conducting career and ethic is guideline or principle that should be practice in life or organization. Professional ethics is an important in field of applied ethics and assesses the moral dimension of human activity in occupations that have professional status. Professional ethics include law, medicine, ministry and by extension higher education, journalism, engineering and management. Professional ethics is concerned with the moral conduct and standards governing the profession and its members.

Professional ethics will help a professional make decision, control their work pressure, control their task, specific the risk that will face by professional, integrity in work and many more. Professional ethics will define the profession’s special relation to the market place. Members earn livelihood in professional roles, accepting certain standard in the form of codes, other measures, continuing education and support mechanism for member.

Professional ethics raise a number of theoretical and specialized questions that are not easily resolved. Among the theoretical issues is the extent to which the special norms and principles governing the professions override individual rights and other moral principles. Professional ethics is concerned with the obligations and responsibility that arise out of a particular kind of service performed for individuals or groups, and in that sense approximate obligations arising out of contractual agreements. In themselves the norms of professional ethics do not define the social or personal relationships of individuals towards one another.

Healthcare

Health care ethics is the application of the core principles of bioethics (autonomy, beneficence, nonmaleficence, justice) to medical and health care decisions. It is a multidisciplinary lens through which to view complex issues and make recommendations regarding a course of action.

Decision-making capacity is a clinical assessment regarding an individual’s ability to make informed decisions about their care. Decisional capacity is directly linked to informed consent and is decision dependent.

Rural health care ethics focuses on health care ethics uncertainty or conflicts occurring in the distinct context of the rural setting. What makes rural health care ethics different is how the rural environment influences both the presentation and the response to ethics conflicts.

The Principle of Nonmaleficence

Nonmaleficence means doing no harm. Providers must ask themselves whether their actions may harm the patient either by omission or commission. The guiding principle of primum non nocere, “First of all, do no harm,” is found in the Hippocratic Oath. Actions or practices of a healthcare provider are “right” as long as they are in the interest of the patient and avoid negative consequences.

Harm by an act of omission means that some action could have been done to avoid harm but wasn’t done. Omission would be failing to raise the side rails on the patient’s hospital bed, upon which the patient fell out and was injured. An act of Commission is something actually done that resulted in harm. An example of an act of commission would be delivering a medication in the wrong dose or to the wrong patient.

The Principle of Beneficence

The beneficent practitioner provides care that is in the best interest of the patient. Beneficence is the act of being kind. The actions of the healthcare provider are designed to bring about a positive outcome. Beneficence always raises the question of subjective and objective determinations, of benefit versus harm. A beneficent decision can only be objective if the same decision would be made regardless of who was making it.

The Principle of Justice

Justice speaks to equity and fairness in treatment. Hippocrates related ethical principles to the individual relationship between the physician and the patient. Ethical practice today must extend beyond individuals to the institutional and societal realms. This means that, in addition to providing fairness in treatment to the patient, the institution and staff must also be treated fairly. For example, it is not fair if a patient cannot make payments and the institution has to pay for the treatments already given for the patient’s benefit.

Education

Educational ethics is a field which considers ethical problems and dilemmas specific to the complexities of education, with a view to assisting educators, educational policy-makers and school communities to clarify these context-specific problems and making ethical recommendations for their resolution.  It includes the history and development of educational policies with a particular focus on its potential or actual ethical implications for school administration, teachers, school students, school communities and others; the analysis and articulation of teacher ethical obligations including but not limited to codes of conduct and ethics in teaching; research relating to ethical conduct, manner and the moral life of schools, the investigation of models and theories of ethical beliefs and decision-making in relation to tertiary, school and child care education; and pedagogical dimensions, interventions or curriculum for teaching and learning professional ethics with initial and in-service teachers.

Corporate

Business ethics (also known as corporate ethics) is a form of applied ethics or professional ethics, that examines ethical principles and moral or ethical problems that can arise in a business environment. It applies to all aspects of business conduct and is relevant to the conduct of individuals and entire organizations. These ethics originate from individuals, organizational statements or the legal system. These norms, values, ethical, and unethical practices are the principles that guide a business.

Business ethics refers to contemporary organizational standards, principles, sets of values and norms that govern the actions and behavior of an individual in the business organization. Business ethics have two dimensions, normative business ethics or descriptive business ethics. As a corporate practice and a career specialization, the field is primarily normative. Academics attempting to understand business behavior employ descriptive methods. The range and quantity of business ethical issues reflects the interaction of profit-maximizing behavior with non-economic concerns.

Interest in business ethics accelerated dramatically during the 1980s and 1990s, both within major corporations and within academia. For example, most major corporations today promote their commitment to non-economic values under headings such as ethics codes and social responsibility charters.

Types:

1. Corporate responsibility

Businesses have responsibilities to their employees, their clients or customers, and, in some cases, to their board of directors. Some of these may be contractual or legal obligations, others may be promises, for example, to conduct business fairly and to treat people with dignity and respect. Whatever those obligations are, the business has a responsibility to keep them.

2. Personal responsibility

Each person who works for a business, whether on the executive level or the entry-level, will be expected to show personal responsibility. This could mean completing tasks your manager has assigned to you, or simply fulfilling the duties of your job description. If you make a mistake, you acknowledge your fault and do whatever you need to do to fix it.

3. Loyalty

Both businesses and their employees are expected to show loyalty. Employees should be loyal to their co-workers, managers, and the company. This might involve speaking positively about the business in public and only addressing personnel or corporate issues in private. Customer or client loyalty is important to a company not only to maintain good business relations but also to attract business through a good reputation.

4. Trustworthiness

A business cultivates trustworthiness with its clients, customers and employees through honesty, transparency and reliability. Employees should feel they can trust the business to keep to the terms of their employment. Clients and customers should be able to trust the business with their money, data, contractual obligations and confidential information. Being trustworthy encourages people to do business with you and helps you maintain a positive reputation.

5. Respect

Respect is an important business ethic, both in the way the business treats its clients, customers and employees, and also in the way its employees treat one another. When you show respect to someone, that person feels like a valued member of the team or an important customer. You care about their opinions, you keep your promises to them, and you work quickly to resolve any issues they may have.

6. Fairness

When a business exercises fairness, it applies the same standards for all employees regardless of rank. The same expectations with regard to honesty, integrity and responsibility placed upon the entry-level employee also apply to the CEO. The business will treat its customers with equal respect, offering the same goods and services to all based on the same terms.

7. Community and Environmental Responsibility

Not only will businesses act ethically toward their clients, customers and employees, but also with regard to the community and the environment. Many companies look for ways to give back to their communities through volunteer work or financial investments. They will also adopt measures to reduce waste and promote a safe and healthy environment.

Social work

Social work ethics are based on the profession’s core values of social justice, service, dignity, and worth of each person, integrity, the importance of human relationships, and competence. These are the overarching ideals to which all social work professionals should aspire. These ethical principles lay the foundation for specific ethical standards that social workers need to follow.

Social work ethical principles include:

• Social justice: Social workers are to challenge social injustice and seek social change on behalf of vulnerable and oppressed individuals and groups of people.
• Service: the primary goals of the profession are to address social problems and help people in need.
• Dignity and worth: Social workers respect the inherent dignity and worth of each person, being mindful of diversity, and interact with each individual in a caring and respectful manner.
• Integrity: Social workers are trustworthy, understanding the profession’s ethical responsibilities and acting in ways that are consistent with those requirements.
• Importance of human relationships: Social workers understand that relationships are a critical vehicle of change and work to include clients as partners in the helping process.
• Competency: Social workers are constantly increasing their skills and knowledge to apply these improved skills in practice. Social workers also contribute to the professions’ knowledge base by conducting, reading, and promoting research.

A moral entrepreneur is an individual, group, or formal organization that seeks to influence a group to adopt or maintain a norm; altering the boundaries of altruism, deviance, duty or compassion.

Moral entrepreneurs take the lead in labeling a particular behaviour and spreading or popularizing this label throughout society. This can include attributing negative labels to behaviour, the removal of negative labels, positive labeling, and the removal of positive labels. The moral entrepreneur may press for the creation or enforcement of a norm for any number of reasons, altruistic or selfish. Such individuals or groups also hold the power to generate moral panic; similarly, multiple moral entrepreneurs may have conflicting goals and work to counteract each other. Some examples of moral entrepreneurs include: MADD (mothers against drunk driving), the anti-tobacco lobby, the gun-control lobby, anti-pornography groups, Black Lives Matter and LGBT social movements, as well as the anti-abortion and pro-choice movements, which are an example of two moral entrepreneurs working against each other on a single issue.

Social Issues

Moral Entrepreneurs contribute essentially to moral panic and moral emergence. It is owing to their creation of chaos with vernaculars that dramatize, name, and interpret them. Did you know that these people or groups use an oratorical tool called Typifying while identifying and defining social problems.

The term moral entrepreneur was coined by sociologist Howard S. Becker in Outsiders: Studies in the Sociology of Deviance (1963) in order to help explore the relationship between law and morality, as well as to explain how deviant social categories become defined and entrenched. In Becker’s view, moral entrepreneurs fall into roughly two categories: rule creators, and rule enforcers.

Rule creators generally express the conviction that some kind of threatening social evil exists that must be combated. “The prototype of the rule creator,” Becker explains, is the “crusading reformer:”