Ethics Compliance Auditing and Emerging Issues

In the international market, global macroeconomic indicators are broadly classified into seven categories. They include; industrial production of a country, investment per-capita, the rate of oil consumption and consistency in capital flows. Other factors are; the rate of unemployment, volume of trade and consumption per-capita. In the recent past, global recessions have been witnessed in different countries during particular years. Some of the most severe economic crises to hit the global market include; the Great Recession, the 2008 Financial Crisis, and the Great Depression. The New York Stock Exchange is globally recognized as one of the most successful platforms owing to the contributions of Wall Street. In any case of a future financial crisis, the stock market will experience a drastic decline in capitalization hence resulting in a slowdown in the performance of USA’s biggest banks (Kotz, 2009).

Just like Lehman Brothers could not be recovered, the country’s major investment banks like Goldman Sachs, Citi, and JP Morgan can be severely affected. Complexities in financial regulations may result in a systemic crisis and increased burdening of the common citizens. Owing to the high risks of trading and reduced profitability, companies may lay off workers hence leading to an unemployment crisis. China is also recognized for its major investments banks like the Industrial and Commercial Bank of China, China Construction Bank and the Agriculture Bank of China. The country’s monetary policy and fiscal regulations are regulated by the People’s Bank of China. Chinese security options are majorly traded at the Shanghai Stock Exchange. If there could be a financial crisis in this economy, the Chinese leading banks will be greatly affected because they control a larger share of the market (Overholt, 2010).

The slowdown in their operations will result in a consequential increase in lending rates for the construction and agricultural companies. That is, the management should not only focus on the profitability of the firm but also the value of stakeholders and the entire market. In financial operations, an ethical decision-making process is useful because it can protect a company from an unforeseeable crisis which may arise due to unrealistic goals set by the management (Ferrell & Fraedrich, 2015). It also promotes peaceful coexistence between a company and its competitors. Other significant roles of ethical practices in financial operations are listed below. Ethical decision-making prevents a company from subprime lending. This is where some unethical firms would lure customers by advertising for cheap loans while concealing the underlying complex terms of the contract.

When the unsuspecting borrowers are trapped by this bait-and-switch method, they tend to default in repayments thus resulting in negative amortization. Financial organizations which adopt ethical considerations in their decision-making process can also mitigate the effect of the systemic crisis. In any money market, the concept of financial capitalism should be immensely observed so that a firm may not suffer the consequences of mispricing or incorrect projections. One sure way of achieving this idea is by engaging all the relevant stakeholders when planning and implementing a company’s decisions. A business organization should honor its financiers by revealing all the necessary transaction details, expenditures and income profits (Husted & Allen, 2008). It should also adhere strictly to the business practices approved by the investors.

Such a high level of transparency and accountability can strengthen their relationship into the future. The Necessity of Ethics Program, Training, and Compliance Auditing An ethics program is necessary for a business it assists in the realization of best practices, moral values and legal regulations of the workplace or entire industry. Ethical requirements may vary according to the business environment however, there are universally applicable moral principles that must be observed in every practice. The idea is particularly helpful in large corporations where business transactions have been designed to follow specific protocols. The extent of deviation from the outlined principles can then be used to determine the effectiveness of a company’ staff in following details. Through compliance auditing, a company can understand the deficiencies which exist in its operations (Hartman, DesJardins & MacDonald, 2011).

These results can be utilized to verify whether such actions were intentional or unintentional so that necessary actions can be taken. The program is also necessary in a firm because it can reveal appropriate recommendations that can be implemented in future operations in a bid to improve financial performance. Thus, the procedure will involve the hiring of reputable experts and assigning them a group of employees to supervise. Each working day, employees will be performing duties as instructed by the expert for a period of one week. Thereafter, an assessment will be conducted to determine whether employees have acquired the desired skills and knowledge. On the other hand, in-house training and mentoring programs will involve new employees who are yet to start working in the organization.