Abstract
The necessity of creating an ethical tone at the top of a business, especially in the accounting profession, is discussed in this study. The tone is set by the board of directors, top management, and other officials, who must all agree on and adhere to ethical standards. Developing a code of ethics, offering ethical training to leadership, and ensuring that internal controls are in place are all steps to setting the correct tone.
The International Federation of Accountants is one example of an organization with a successful ethical tone. A high-quality tone at the top involves leadership visibility and accessibility, board participation, and employee surveys. Crisis management planning is also essential. Nevertheless, an ethical tone from the top encourages honesty, openness, and adherence to rules and regulations, therefore safeguarding an organization’s image.
Introduction
The attitude, values, and beliefs of an organization’s senior management and board of directors are its tone at the top. It sets the tone for how workers will act and how the corporation will do business (Bragg, 2023). Setting an ethical tone at the top of any firm is critical to ensuring the company’s ethical practices and culture. This is particularly true in the accounting profession, where accountants often deal with financial issues and maintain compliance with government rules (Arjoon, 2019).
The paper will address and define tone at the top, discuss who sets the tone, and outline the procedures undertaken to establish an appropriate tone. Examples of the people who set the tone and the importance of tone setting will be given. Some of the subheadings include the establishment of tone, important steps to follow to set the right tone, examples, and a conclusion.
Establisher of Tone
Typically, the board of directors, senior management, and other members of the company’s leadership team are the ones that establish the tone at the very top of the firm. These employees must come to a common understanding of and commitment to ethical standards (Braumann et al., 2020). Moreover, they must serve as examples for the rest of the company to guarantee that their message is conveyed correctly to the rest of the business.
Importance
It is impossible to overstate the importance of setting an ethical tone at the top of any accounting organization. An ethical tone promotes the organization’s values and standards and ensures everyone is held to the same standards (Cai et al., 2019). It also promotes honesty and transparency, which are necessary for accounting. Furthermore, an ethical tone ensures that the organization complies with applicable laws and regulations, and it helps protect its reputation.
Steps to Follow to Set the Right Tone
Figure I indicates various procedures that may be taken to guarantee an ethical tone at the top of any accounting firm. First, the company’s code of ethics should be established and broadly promoted within the business. This code should be checked and updated regularly to ensure it is current and relevant (ACCA Global, 2023).
Moreover, the company should guarantee that the leadership team receives sufficient ethical training and that their commitment to ethical standards is conveyed to the rest of the firm, as shown in Figure 1. Lastly, the business should establish an effective internal control mechanism to ensure ethical standards are followed.
Examples
The International Federation of Accountants is one organization that has successfully established an ethical tone at the top (IFAC). IFAC has developed a comprehensive set of ethical principles that its members have adopted and a system of internal controls to ensure that these principles are followed (IFAC, 2021). Moreover, the IFAC has put in place a variety of educational and training initiatives to guarantee that its members are appropriately schooled on ethical issues.
Figure 2: Examples.
Visibility and accessibility refer to the extent to which the board of directors and other members of the leadership team are visible and accessible to the rest of the organization, as indicated in Figure 2. This guarantees that the organization’s communication remains precise and uniform and that the tone at the top is effectively communicated (Tam et al., 2023). It also fosters trust and confidence in the leadership team of the organization, as well as open and honest communication.
Interaction with the board is essential for setting an ethical tone at the top (D’Augusta & DeAngelis, 2020). The board of directors and other members of the organization’s leadership team must interact with the rest of the organization, answering questions, offering advice, and listening to comments. This contributes to ensuring that the organization’s message is clear and consistent and that the ethical tone is appropriately expressed.
It is critical to plan for the worst when developing an ethical tone at the top. Creating a contingency plan for coping with a crisis, whether it is moral or monetary in nature, is part of this. (Maimur, 2020). To ensure that the organization’s message is appropriately transmitted, this strategy should include mitigation measures and communication and training methods (Do & Yau Lai, 2021).
Staff surveys are an important way to evaluate the success of the top-down ethical tone. The survey should be anonymous and should include questions about the organization’s ethical standards, compliance with government regulations, and overall culture. This helps ensure that the top-down tone is successful and that potential problems are identified and addressed.
Conclusion
In order to guarantee that an accounting firm is ethically doing its business and that it complies with the requirements imposed by the government, a moral tone must be set at the highest levels of the organization. The company’s board of directors, top management, and other leadership team members must establish the tone (Do & Yau Lai, 2021). They also make the necessary efforts to ensure their message is properly transmitted to the rest of the business. Organizations such as the IFAC have effectively imposed an ethical tone from the top, and these organizations serve as an example of how other organizations might do the same thing.
References
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