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International Code of Ethics

Question:

Discuss about the Ethical Conduct for Financial Management.

The Code of Ethics of Eli Lilly and Company for financial leaders has stated the ethical principles that they should follow for carrying out their roles and responsibilities. As per the international code of ethics, there are five fundamental principles that the financial leaders need to comply as follows:

  • Integrity: The financial leaders must carry out their roles in an honest manner for developing the professional relationships
  • Objectivity: The decisions taken by the financial leaders should be unbiased without having any influence of outside parties
  • Professional Competency: The financial leaders must posses required skills set and competencies for ensuring that the clients receive competent professional services. The professional competency is required so that financial leaders carry out their responsibilities in due diligence and as per the technical and professional standards (International federation of Accountants, 2017).
  • Confidentiality: The financial leaders also hold the responsibility of protecting the confidential information of their entity so that it cannot be accessed by outside parties for unethical purposes.
  • Professional Behavior: The financial leaders should comply with the required laws and regulations for carrying out their roles as per the professional standards (McMillan, 2012).

Thus, as per this standard code of ethics, the Eli Lilly and company financial management code can be regarded to be comprehensive. The code of ethics of the company has stated that the financial leaders should act with integrity, objectivity, confidentiality, and competency and as per the standard professional behavior. The code of ethics of the company has advocated that it is dedicated to achieve highest standards of corporate conduct that are based on its core values and ethical principles. The Red Book Code of Business Conduct has determined the ethical framework that the company follows for carrying out its business activities . However, the code of ethics of financial management of the company lacks the consequences that the financial managers will face for breach of this code of conduct. The actions that the company will take over the disciplinary matter arising due to violation of the above code are not provided in the company code of ethics. Also, the code of conduct does not state the procedures to be followed while taking decisions in the situations relating to ethical dilemma (International federation of Accountants, 2017).

The ethical principles undertaken by the company for maintaining the privacy of employees faced with violations charges is also indicated in the ethical standards.  Also, the ethical code followed by the company for maintaining the confidentiality of employees reporting the possible violations is also not stated in its mentioned code of ethics. The company should also develop ethical codes that promote open communication and interaction between all its financial managers and leaders about any ethical issues for ensuring the successful adoption of ethical standards (International federation of Accountants, 2017). This is necessary for enhancing co-operation between all the financial leaders of the company so that they act in due diligence. In addition to this, there are some ethical codes of the company that needs clarification such as specifying the respective legal rules and laws within which the financial leaders of the company works and carry out their roles (Eli Lily and Company, 2014).

Comprehensiveness of Eli Lilly and Company financial management code

Similar to the code of ethics for financial management of Eli and Lily Company, the Starbucks Coffee Company has also stated its code of ethics for the financial leaders. There are many similarities and differences in the code of ethics of both the companies. The similarities are advocating the use of honesty and integrity in carrying out the roles and responsibilities is mentioned in both companies’ codes. Both the companies have regarded the compliance of their financial leaders with the governmental laws and rules in carrying out their job responsibilities. Also, the financial leaders of both the companies comply with the ethical code of providing fair, accurate and understandable information as per the objectivity fundamental principle of ethical accounting practices (Eli Lily and Company, 2014). The financial leaders of both the companies have undertaken the obligations of protecting the confidentiality of information they posses for carrying out their work duties. Also, they have undertaken the obligations to promote the ethical behavior in the work environment for developing an internal control over the internal business processes and activities. The financial leaders of both the companies also seek to carry out their work responsibilities with utmost care, competence, diligence to avoid any mis-representation of material facts and figures in order to protect the stakeholder interests (Code of Ethics for CEO, COO, CFO and Finance Leaders, 2017).

There also some differences identified in the ethical code for financial management of both the companies. The differences are Starbucks code has not stated the ethical codes for reporting the fraudulent activities. Also, like Lilly’s code of business conduct stated in ‘The Red Book’, the Starbucks standards of business conducts are reported in its annual reports. The noted differences exist as per the nature of business operations of both the companies and thus they have developed and implemented the ethical codes that help them to improve their quality of their respective business procedures (Code of Ethics for CEO, COO, CFO and Finance Leaders, 2017). Thus, it can be said after examining the code of ethics of Eli and Lily Company that development and implementation of effective financial code of ethics is necessary for every business entity. This is because the code of ethics implementation will ensure that all the financial business actions are taken as per the ethical principles that help in promoting the transparency of business operations among the stakeholders. The compliance with the ethical codes will help in protecting the interests of all the stakeholders and thus helps in maximization of their value. This in turn will lead to strengthening of goodwill of the company across the world and thus helping it to improve its productivity and profitability (International federation of Accountants, 2017).

References

Code of Ethics for CEO, COO, CFO and Finance Leaders. 2017. Retrieved 25 October, 2017, from: https://globalassets.starbucks.com/assets/a626d16b18b74e209e4672b5829e274c.pdf [Accessed on: 25 October 2017].

Eli Lily and Company. 2014. Code of ethical conduct for financial management. Retrieved 25 October, 2017, from: https://www.lilly.com/about/business-practices/ethics-compliance/code-of-conduct/code-of-conduct-financial-management.aspx

International federation of Accountants. 2017. Retrieved 25 October, 2017, from: https://www.ifac.org/global-knowledge-gateway/ethics/discussion/ethical-leadership-and-developing-code-conduct 

McMillan, M. 2012. Codes of Ethics: If You Adopt One, Will They Behave? Retrieved 25 October, 2017, from: https://blogs.cfainstitute.org/investor/2012/02/20/codes-of-ethics-if-you-adopt-one-will-they-behave/

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