Ethics, Compliance Auditing, And Emerging Issues

Running head: ETHICS, COMPLIANCE AUDITING AND EMERGING ISSUES 1

Ethics, Compliance Auditing, and Emerging Issues

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Institution

ETHICS, COMPLIANCE AUDITING AND EMERGING ISSUES 2

Oil price shock to the global economy

The unexpected drop in global market oil prices in 2015-16 may be compared to two

recent incidents, the one in 1986 and the events of 2008–09. The price slump has reduced the

costs of living, as well as raised real incomes of consumers in nations where the decline in prices

has been transferred to users. Likewise, firms employing oil in their production activities have

profited from reduced input costs in the affected countries. The presumed decline in the marginal

costs of firms should be reflected in depressed producer prices for affected goods (Aastveit,

Bjørnland & Thorsrud, 2015). The real income profits should lead to increased spending and,

separate factors constant, a lift in global economic growth.

The above demand channel performs a vital role in transmitting the impact of the oil

prices slump and largely depends on the magnitude of real income gains. The flipside associated

with windfall profits is the revenue losses experienced by oil producers. The total impact on the

global economy is dependent on a variety of determinants including the character and extent of

the slump in oil prices, and the magnitude of the reduction in price felt by oil consumers, among

others (Aastveit et al., 2015). Beginning with the character of the decline in oil price, two

features are crucial, that is, the underlying motivators of the drop in price and the endurance of

the decline in oil prices.

Weaker oil prices may be a situation driving the world's economic action or a reply to

additional shocks driving world economic growth (Kilian & Hicks, 2013). In a situation whereby

weaker oil prices drive the world's economic action, the slump is largely driven by determinants

not connected to current world economic conditions; for instance, adjustments in global oil

supply as a result of technology (Kilian & Hicks, 2013). In a situation where the drop is a reply

to additional shocks driving world economic growth, the depressed prices may be a sign of other

ETHICS, COMPLIANCE AUDITING AND EMERGING ISSUES 3

unforeseen changes to world economic developments (Kilian & Hicks, 2013). A good example is

a shock in demand occurring in a larger economy such as China with significant spillovers to

numerous other economies. Recognizing the causes of the drop in oil prices in 2015 is therefore

critically necessary for evaluating its probable global economic effects.

Empirical surveys imply that oil output in various oil-exporting nations including Russia,

some Middle Eastern countries, and Nigeria, could shrink by 0.8–2.5% in 2015 after a 10% drop

in the yearly mean oil price (Aastveit et al., 2015). The slowdown could compound fiscal

earnings losses in the major oil-exporting nations. Fiscal breakeven rates, which vary between

$54 a barrel in Kuwait's case to $184 in Libya's case, exceed prevailing oil rates for most global

oil exporters (Aastveit et al., 2015). In a few countries, the pressures exerted on fiscal budgets

can be partially mitigated by massive sovereign wealth capital and reserve assets (Kilian &

Hicks, 2013).

By contrast, several weak oil exporters; for instance, Libya and Yemen, do not possess

vital buffers, and consequently, a sustained drop in oil price necessitates considerable fiscal, as

well as external regulation including implementing import compression measures. Aastveit et al.

(2015) posit that recent changes in the oil markets globally will also demand alterations in

macroeconomic policies in some oil-exporting nations including Nigeria, Saudi Arabia, Russia,

and Venezuela.

According to Aastveit et al. (2015), a 10% oil price drop would increase growth in

economies which are net oil importers by around 0.1% and 0.5%, depending on GDP share

accounted for by oil imports. For China, the effect of the slump in oil prices registered on

economic growth is anticipated to enhance activity by between 0.1 and 0.2 percentage points

ETHICS, COMPLIANCE AUDITING AND EMERGING ISSUES 4

since oil commodities account for just 18 percent of net energy consumption (Aastveit et al.,

2015).

Role of Ethical Decision-Making in Business Organizations

Ethical decision-making in business organizations is crucial in meeting the requirements

of a business organization. Implementing an efficient organizational ethics plan involves a series

of steps. Decision-makers are required to build an effective organizational structure to be used in

managing and supervising the programs of ethics, as well as compliance within a business

organization (Weiss, 2014). Ethical decision-making in business organizations ensures that the

risks associated with organizational noncompliance and misconduct are eliminated. According to

Weiss (2014), ethics in decision-making ensures that the objectives of an organization's

compliance are met. Ethical decision-making also ensures that the ethical cultures are upheld

within the organization in addition to improving staff compliance (Weiss, 2014). According to

Weiss (2014), an ethical decision-making program in a business organization is vital in reducing

unforeseen incidences and threats to a business profitability

An analysis of the impact of business ethics on stakeholder relationships

Stakeholder relationships are influenced by business ethics within a business

organization. The various stakeholders may include staff, ethics officers, the board of directors,

and other administrators. A board of directors in a business organization encounters many

hurdles in the implementation of a fair monitoring process required to check illegal, as well as

unethical conduct in the organization ("Ethics", n.d.). One difficulty is that organizational ethics

might not draw recognition on the company's board agenda. The chief executive officer and the

management team set the program for company board meetings, in addition to serving as the

principal information source for other board members ("Ethics", n.d.).

ETHICS, COMPLIANCE AUDITING AND EMERGING ISSUES 5

An additional difficulty is reaching the right level of monitoring in order to illustrate

aggressive detection, as well as punishment resulting from various ethical standards violations

without generating an environment of distrust, which erodes innovation ("Ethics", n.d.). Board

members need to enquire the proper questions in addition to providing an atmosphere of trust

between themselves and the ethics officers. A fundamental role of an ethics officer involves the

coordination of ethics programs in collaboration diverse company managers within the fields of

governance, human resources, communications, and financial risk management ("Ethics", n.d.).

Moreover, an ethics officer communicates frequently with the media, customers, and suppliers

concerning ethical matters linked to a business organization ("Ethics", n.d.).

It is necessary to conduct training in a company to ensure that the workforce is cognizant

of mandatory legal, as well as ethical compliance standards. Research has revealed that single

ethics training tends to result in transient outcomes in the event that organizations do not

implement continuous, interactive training, in addition to providing organizational support

("Ethics", n.d.). For the workforce to sufficiently learn required concepts, their training must

involve a time when they can exercise applying ethics at the workplace ("Ethics", n.d.).

A well-planned program encompassing ethics training is imperative in establishing an

ethics culture. In developing a training program, business organizations need to create a program

suited to a specific audience target audience through identifying, as well as prioritizing key perils

by workforce segment ("Ethics", n.d.). For instance, training concerning data privacy may be

relevant to workforce groups that utilize computers. Conducting training is also essential since it

enables employees to identify and report incidences of misconduct or harassment from other

employees.

ETHICS, COMPLIANCE AUDITING AND EMERGING ISSUES 6

Compliance auditing is essential in identifying high risk sectors and unforeseen risk

issues (Usnick & Usnick, 2013). A business compliance auditing program should have the

capacity to evolve, as well as mature. Usnick & Usnick (2013) posit that a compliance audit is

necessary for seeking potential difficulty areas that are yet to recognize notice and designated as

problem domains. Concurrently, the modern compliance setting leaves limited space for

experimentation, and as such, compliance auditing ensures crucial time is not wasted (Usnick &

Usnick, 2013). The whole compliance program, incorporating an audit, should be aggressively

proactive (Usnick & Usnick, 2013).

Training Plan

Scope

The training plan will be directed at employees at different levels within the organization.

The workforce to be trained will comprise IT, accounting, sales, purchasing, customer service,

and operations department employees. Additionally, executives, sales staff operating in global

markets, managers, and supervisors will be included. The training program will incorporate

training on occupational fraud, data privacy, as well as data security, bribery, and hiring policies

concerning discrimination. Moreover, identifying and reporting discriminatory practices will be

taught to all employees.

Training Methodology

The training plan will employ lectures, presentations, scenarios, case studies, videos,

role-playing, as well as multiple e-learning platforms. Awareness training will comprise brief,

targeted messages concerning traditional ethical issues. Additionally, the training plan will

include short soap opera type videos that emphasize fundamental topics on ethics that are

relevant to employees. The videos will serve to bolster company policies, as well as generate

ETHICS, COMPLIANCE AUDITING AND EMERGING ISSUES 7

dialogue between personnel. The training program will time the period just before accounting

department employees present expense reports to make the videos more effective. Moreover, the

videos used will be customized to address ethical issues; for instance, videos which feature

appealing street interviews or humorous situations whereby characters’ approach ethical

dilemmas.

The training will incorporate informal training to be carried out through online social

media, organization's discussion boards, and regular learning sessions. Moreover, formal training

will involve online platforms, face-to-face, or both. For executives, the training plan will employ

in-person training in order to address high-risk issues and ethical violation management.

Training concerning harassment policies for all employees will be carried out online.

Additionally, role playing, as well as discussions, will take place throughout live sessions.

Key considerations

The factors that will be considered in the training plan include needs assessment, learning

objectives, learning styles, mode of delivery, budget, delivery style, and audience. Needs

assessment and learning objectives will take into account the type of training that will be

required in the organization and the objectives to be achieved. Learning styles will incorporate

the modes of learning that are important to the training program's development. The delivery

mode will consider the method that is most effective to attain the program's objectives. The

budget will be based on a style that is financially sustainable while also coherent with the goals

of the program. Moreover, considerations on delivery style and audience will determine whether

the training will be self-paced and/or instructor led, as well as the types of discussions to be

developed in the training.

ETHICS, COMPLIANCE AUDITING AND EMERGING ISSUES 8

References

Aastveit, K. A., Bjørnland, H. C. & Thorsrud, L. A. (2015). What drives oil prices? Emerging

versus developed economies. Journal of Applied Econometrics, 30(7), 1013-1028.

Ethics. (n.d.). Retrieved June 17, 2016.

Kilian, L. & Hicks, B. (2013). Did unexpectedly strong economic growth cause the oil price

shock of 2003–2008? Journal of Forecasting, 32(5), 385-394.

Usnick, L. & Usnick, R. (2013). Compliance program auditing: The growing need to insure that

compliance programs themselves comply. Southern Law Journal, 23, 311.

Weiss, J. W. (2014). Business ethics: A stakeholder and issues management approach. San

Francisco: Berrett-Koehler Publishers.

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