Audit Procedures for Ethical Behavior
Standards of ethics aren’t important solely for large corporations. It is just as important for a small business to set standards that define moral behavior and draw a line between right and wrong. Some of the most common ethical standards relate to hiring practices, maintaining a safe and healthy work environment, use of business resources and situations that have the potential to create a conflict of interest.
An annual ethics auditing process provides an opportunity to reassess the effectiveness of ethical standards in shaping internal behavior.
Start by setting auditing benchmarks that provide a basis for comparing what should be occurring versus what is occurring. Qualitative benchmarks such as whether the business has an ethics officer, provides ethics training as part of new-hire orientation and has a documented process for dealing with ethics violations focus on assessing the strength of the program itself.
Quantitative benchmarks that track training-session attendance, noncompliance violations and consequences for violations focus on how well employees adhere to ethical standards.
Independence and objectivity is essential during the audit and results-evaluation process. Avoid even the appearance of a conflict of interest by including team members who represent a cross-section of the business.
Recuse individual audit team members when a companywide audit turns its focus to the department to which a team member belongs.
Before starting, the team should determine what information it will collect and whether the information will come from reviews of records, interviews or observation. In the case of interviews, the team should determine in advance which employees it will interview.
Most ethics audit methods are based on checklists organized into sections that correspond to the business’s code of ethics. Checklist sections may include, for example, discrimination issues or complaints, conflict of interest issues, access to company information, bidding and award practices and giving and receiving gifts.
In a companywide ethics audit, the team most often starts by auditing the ethics policy before moving on to auditing individual areas and departments. An ethics audit can occur over a specific time period and focus on different departments as the cycle progresses.
The objective of an ethics audit is to determine what the business is doing right, which ethical policies or standards may need strengthening and to assess how well employees are complying.
A final audit report presents an objective review of the facts and makes recommendations for policy improvements. Ethical violations uncovered during the course of the audit should be dealt with immediately according to the policies and procedures outlined in the code of conduct.
After the business owner and audit team review audit results, the code of standards should be modified if it’s deemed necessary.