Cabreros, Jason Ace B.

4-DAC

BUSINESS POLICIES
Policies are broad statements, adopted by a business, that set out what the business stands for and what its
goals are. Procedures are usually implemented to support each policy explaining how to apply the policy
to the business's customers, employees and products, and the instructions necessary to follow the policy.
Examples of areas where businesses typically institute policies are ethics, human resources, accounting
and customer service.

Ethics
Ethics policies address issues such as honesty, fairness, integrity and respect. For example, the longstanding ethics policy regarding honesty instituted at Levi Strauss and Co. as quoted by Inc.com reads:
Honesty: We will not say things that are false. We will never deliberately mislead. We will be as candid
as possible, openly and freely sharing information, as appropriate to the relationship.

Human Resources
Policies imposed in the area of human resources address issues such as hiring and termination, benefits,
promotion and salary increase and discipline. For example, a typical human resources policy addressing
hiring might read: New hires shall be subject to a three month probationary period during which
employment is 'at-will.'

Customer Service
Customer service policies address issues such as employee attitude toward customers. A sample policy
dealing with customer relations as reported by Infonet.com reads: All employees deal with our
customers! No matter what your position, every employee impacts the customer in some way. Employees
are reminded to promote the company just as they would represent their families. This means being
friendly and courteous on the business property, while visiting our stores, driving our vehicles on roads
and highways and in daily interactions. After all, you never know who knows the person you are talking
to... Other ways employees can enhance customer relationships are to answer phones before three rings,
transfer office calls correctly, follow through on promises, give updates if necessary, greet walk-in
customers or just smile and say hello. Treating other as you expect to be treated goes a long way in
customer service relationships.

Accounting
Accounting policies deal with how money is handled in the company, both the spending and the
documenting of inflow and out-flow. An example of a typical accounting policy regarding receipt of gifts
to an organization might read: Gifts of stock, bonds, manuscripts, art and antiques are recorded and such
information is openly available to officers, stock holders and employees as with any other corporate
asset.

Kenneth Lay Enron

Enrons downfall, and the imprisonment of several of its leadership group, was one of the most
shocking and widely reported ethics violations of all time. It not only bankrupted the company
but also destroyed Arthur Andersen, one of the largest audit firms in the world.
The Securities and Exchange Commission (SEC) announced in 2001 that it was investigating the
accounting practices of Enron after several years of questions raised by analysts and
shareholders. The resulting disclosures and write-downs by the company reduced investor
confidence and the companys credit rating, leading to thebankruptcy in December 2001. The
SEC announced that it would pursue charges against Lay, former CEO Jeffrey
Skilling, CFO Andrew Fastow and other high-ranking employees.
The charges related to knowingly manipulating accounting rules and masking the enormous
losses and liabilities of the company. Lay and Skilling were tried together on 46 counts,
including money laundering, bank fraud, insider trading and conspiracy. Skilling was convicted
on 19 counts and sentenced to over 24 years in prison.
Lay was convicted on six counts of fraud and faced up to 45 years in jail. Lay died in 2006, three
months prior to his sentencing hearing. The resulting investigation of the Enron scandal resulted
in Congress passing the Sarbanes-Oxley Act to improve corporate accountability

Bernard Ebbers Worldcom

As the SEC was conducting its investigation of Enron, an even larger CEO ethics violation was
brewing. Worldcom, which at the time was theUnited States second-largest long-distance
telecommunications company, entered into merger discussions with Sprint. The merger was
ultimately dashed by the Department of Justice over concerns about it creating a virtual
monopoly. The situation took its toll on the companys stock price.
CEO Bernard Ebbers owned hundreds of millions of dollars in Worldcom stock, which he
margined to invest in other business ventures. As the stock price dropped, banks began

demanding that Ebbers cover more than $400 million in margin calls. Ebbers convinced the
board to lend him the money so that he would not have to sell substantial blocks of stock. He
also began an aggressive campaign to prop up the stock price by creating outright fraudulent
accounting entries. The fraud was ultimately discovered by Worldcoms internal audit
department, and the audit committee was informed. The resulting SEC investigation resulted in
the companys bankruptcy filing in 2002 and the conviction of Ebbers on fraud, conspiracy and
filing false documents charges. Ebbers began a 25-year sentence in federal prison in 2006.