Code of Conduct

A code of conduct is an essential set of guidelines that every organization should have clearly defined and consistently enforced. While the textbook defines it as “a published listing of procedures and/or actions that simply will not be tolerated by [a] company,” it is also used as a means of outlining proper behavior so that the employees of a company know and understand what is expected of them (Hosmer, 2011). Laws surrounding codes of conduct have evolved over the years but there are certain factors that a company can generally look to when attempting to develop a solid set of ethical standards. When it comes to ethics in the field of accounting, there are a number of items that should be covered in a code of conduct, some of which may be insufficiently addressed in the industry’s current code of conduct. The importance of having that code is crucial, particularly because there have been countless companies over the years that have been discussed in the news for being in violation of their own rules, often times for doing things that they failed to address in their code of conduct. Ensuring that no stone is left unturned helps to eliminate any possibility of a misunderstanding, as well as to protect the company and its employees from a potential financial and/or legal matter. Violating an organization’s code of conduct can result in a variety of moderate to severe consequences, either from the organization itself, the law, or in some cases both. While each organization is responsible for creating its own disciplinary acts for any employee who violates that organization’s code of conduct, the organization must abide by written standards set forth by the government, many of which are listed in the Sarbanes-Oxley Act, which was created in 2002. Under Section 406 of this Act, it is made clear that companies are not necessarily required to adopt a code of ethics; however, “if a company has not adopted a code of ethics, it must disclose why it has not done so”

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