BUSINESS ETHICS SMART PLAN

ETHICAL PRACTICES IN INFORMATION TECHNOLOGY INDUSTRY ETHICAL PRACTICES IN BANKING AND FINANCE

BUSINESS ETHICS END TERM SUBMISSION

Business Ethics SMART PLAN (End Term Submission)

OBJECTIVES OF STUDY:
TO UNDERSTAND AND IMPLEMENT ETHICAL PRACTICES IN INFORMATION TECHNOLOGY INDUSTRY TO UNDERSTAND AND IMPLEMENT ETHICAL PRACTICES IN BANKING AND FINANCE
Sr No.
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Topic
Cyber-ethics and Internet

Book or Journal Reference/Link

Book - Readings in Cyber-Ethics

Author
Richard A. Spinello, Herman T. Tavani Brian Busovsky -

Publisher
Jones and Bartlett Publishers, Inc. Ethica Publishing -

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Ethics in patent protection IPR Ethics in Data aggregation and mining Software Engineering Code of Ethics Ethics in Outsourcing CSR in International Banking Ethics in Accounting

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A white paper published on SOEs (University of Santa Cruz Jack Baskin School of Engineering) website. (Link) An article on Leeds School of Business (University of Colorado) website. (Link) Code of Ethics published by ACM (Association of Computer Machinery and IEEE (Institute of Electrical and Electronics Engineers) Joint Task Force (Link) An article published on DAU (Defense Acquisition University) (Link) An article on Institute for Social Banking (ISB) website (Link) Book Accounting Ethics

David A. Breslin Ronald F. Duska & Brenda Shay Duska Aloy Soppe (2004) Mark S. Schwartz (2003) Tom Campbell

Blackwell Publishing Kluwer Academic Publishers Kluwer Academic Publishers -

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Sustainable Corporate Finance Ethical Investing Ethics of Auditing

Journal of Business Ethics (Link) Journal of Business Ethics (Link) An article in Australian National University (ANU) website (Link)

Business Ethics SMART PLAN (End Term Submission)

I.

Cyber-ethics and the Internet Cyber-technology refers to a broad spectrum of technologies that range from stand-alone computers to a cluster of networked computing, information and telecommunication technologies. Cyberethics can be defined as a field of applied ethics that examines moral, legal and social issues in the development and use of cyber-technology. The ethical issues that arise on-line, pertaining to cyber-ethics and internet, are not so different from ethical issues off-line. Hence it should not surprise, us if the most defensible norms for behaviour online are identical to the norms of behaviour off-line. Cyber-ethics would seem to call for the following three rules 1. Know the rules of the forums in which you communicate and follow them 2. Respect privacy and property rights of others. When I doubt, assume that user wants privacy and ownership. 3. Respect the individuals with whom you communicate and those who are affected by your communication; that is, do not deceive, defame or harass.

II.

Ethics in patent protection Intellectual Property Rights - The right to own one's genius is not a new concept. However, with the arrival of the digital age, it has become much harder to remain in control of one's intellectual property. Intellectual property has grown from the need to protect one's new invention, such as soap, to the need to protect a slogan or a colour. In other words, intellectual property rights no longer protect solely the interest of preserving a trade secret; it is now the interest to preserve one's monetary gain. Four areas have been covered under Intellectual property - Patents, copy rights, trademarks, and trade secrets. Patents - Patents are grants from the government giving exclusive rights to make, use, and sell a product for 20 years.'' Patents protect novel, useful, non-obvious and intangible ideas. Copyrights - Copyrights are the most common form of protection. Copyrights protect all written pieces including, but not limited to: books, periodicals, songs and music, theatre productions including all accompanying music, movies and all accompanying music, letters, etc. Copyrights are important because they protect the rights of freedom of speech and of the press. Trademarks Trademarks ban trafficking in counterfeit goods or services. This means that anyone who infringes upon the trademark of another counterfeits a good or a service. Trademarks are the easiest are to infringe upon. This is due to the fact that persons trademark everything. The benefit of trade-marking something is first to ensure that one creates something that speaks of their product.

Business Ethics SMART PLAN (End Term Submission)

Trade secrets - Trade secrets are the riskiest of the four areas. With a trade secret, the information stays theirs, but if their secret is ever discovered, they will be sorely out of luck. Enforcing intellectual property laws as they stand now is morally problematic. A dialogue should begin regarding what sort of laws we need to promote the public good, citizens' moral character, what the rights and duties we have toward each other, etc. There are alternatives to the way we currently handle intellectual property (for example, not acknowledging its existence), and they would be part of a comprehensive pursuit towards a more ethical legal and/or social system. Anything short of discussing the ethical implications of intellectual property in the context of evaluating its worth would be shortsighted. III. Ethics in data aggregation and mining With the advancements in data technologies data aggregation and mining has become much easier, powerful and extensive. Data aggregation and mining deals with collection of raw data and usage of software to transform this data into information, using which organizations and institutions can make decisions. While databases can provide vital information for making decisions, it can also lead to infringement of data privacy rights. Each person has a right to protect his/her personally identifiable information (PII). When organizations and governments use this data to make decisions and analyse the markets they knowingly or unknowingly breach the data privacy rules. The use of databases to harness the power of data has grown and continues to grow rapidly for three primary reasons: databases can transform data into information, an increase in the amount of available data, and significant improves to both the hardware and software components of database technology. As organizations have come to realize this power, the use of databases has grown significantly. Especially, governments have also started extracting personally identifiable information and use the same to tackle problems that relate to terrorism. In the light of recent terrorist attacks that have happened around the world, there are two schools of thought that have emerged one school thought is pro-dataaggregation (enables governments to tackle terrorism), second school of thought perceives this data mining and collection as a threat to the privacy of individuals and is worried about the un-intended threats that emerge from extensive data mining and collection. Citizens can choose one of the following courses of action to tackle ethical issues related to data aggregation and mining. 1. The first is to accept data mining and the related ethical dilemmas and issues in return for increased security. The option requires the citizens to place complete faith on governments and organizations that use their information. 2. The second option is to strike a compromise, where in some policies are accepted and some are not. This means that there is a trade-off between security and privacy.

Business Ethics SMART PLAN (End Term Submission)

3. The final option is to rebel against data aggregation and mining programs in order to preserve our privacy. This option assumes that there are other ways to deter terrorist attacks or that the terrorist threat is not worth sacrificing privacy for.

IV.

Software Engineering Code of Ethics (SECE): Mentioned below is the code of ethics as recommended by ACM/IEEE-CS Joint task force. Software engineers shall commit themselves to making the analysis, specification, design, development, testing and maintenance of software a beneficial and respected profession. In accordance with their commitment to the health, safety and welfare of the public, software engineers shall adhere to the following Eight Principles: 1. PUBLIC - Software engineers shall act consistently with the public interest. 2. CLIENT AND EMPLOYER - Software engineers shall act in a manner that is in the best interests of their client and employer consistent with the public interest. 3. PRODUCT - Software engineers shall ensure that their products and related modifications meet the highest professional standards possible. 4. JUDGMENT - Software engineers shall maintain integrity and independence in their professional judgment. 5. MANAGEMENT - Software engineering managers and leaders shall subscribe to and promote an ethical approach to the management of software development and maintenance. 6. PROFESSION - Software engineers shall advance the integrity and reputation of the profession consistent with the public interest. 7. COLLEAGUES - Software engineers shall be fair to and supportive of their colleagues. 8. SELF - Software engineers shall participate in lifelong learning regarding the practice of their profession and shall promote an ethical approach to the practice of the profession.

V.

Ethics of Outsourcing: Outsourcing in a very common way or reduction of costs and thus increase in profits. Outsourcing in IT involves the movement of jobs from the country where in the company operates (typically characterized by high labour costs), to a country where similar labour is much cheaper. Most companies which outsource there IT operations, with a knowledge that there are operational risks associated with outsourcing in terms of data theft, IP theft, quality issues, decreased customer satisfaction etc. However, ethical and moral issues arise when organizations start to analyse the human costs

Business Ethics SMART PLAN (End Term Submission)

associated with outsourcing. From a financial perspective, some employees (especially government employees) who lose their government jobs also lose their retirement and health benefits as they are forced to move into private sector. Therefore many displaced employees in the country which outsources pay heavy prices in return of increased profits for government and organization. Ethical analysis of outsourcing can also be done using the question Does end justify means? (Machiavellianism). While outsourcing decisions are taken the human beings/employees must not be considered as the means for achieving profits. For example, in order to increase profitability through reduced costs (the end), corporations are, among other things, leveraging the use of outsourcing (the means). Of course, a corporation would never defend an action by arguing: The ends justify the means. Nevertheless, the Machiavellian model is quite visible at times. In the real world, many considerations must be addressed before making business decisions, and the considerations of cost and effectiveness. One can argue that to make business decisions based on the purest sense of ethics, without addressing economics, politics, or related issues, are to forgo necessary pragmatism, and ultimately are self-defeating. However, it does not have to be a case of either/or. Ethics should be given a more dignified seat at the table, where the human costs of outsourcing are given thoughtful consideration. A win-win situation should be sought after, and we must challenge ourselves to outsource only when the displaced employees also benefited in the process. We will be pleasantly surprised by the outcome. VI. CSR in International Banking (Social Banking) CSR in International banking and the concept of social banking cannot have a unanimously accepted definition given the variety of its historic origins and underlying values. However, the following definition tries to capture the common denominator using which all organizations describe social banking and CSR in international banking. Social Banking describes the provision for banking and financial services that consequently pursue, as their main objective, a positive contribution to the potential of all human beings to develop, today and in future. Social banking is always conscious about the usage of money as a formative medium. The concept of social banking is a process and not a state. Some of the common characteristics of CSR in banking and social banking are (a) Dialogue with a wider group of stakeholders (b) emphasis of human rights and solidarity. (c) Triple bottom line approach (d) rejection of profit maximisation principle and speculative activities (e) Lending as a central ingredient towards renewal and development of societies. Ethics in Accounting: A management accountant or a financial accountant works for a company either as the chief financial officer or controller, as a line accountant performing a number of possible tasks, or even as consultant. Management accountants can operate financial managers, accountants or as auditors. They play a crucial role in forming and projecting a companys financial image in front of its shareholders and stakeholders. Therefore,

VII.

Business Ethics SMART PLAN (End Term Submission)

VIII.

knowledge and practice of accounting ethics is of paramount importance to them. The code of ethical conduct can be analyzed objectively as follows: a. Competence: The management accountant maintain an appropriate level of knowledge and skill; follow the rules, regulations and technical standards; and prepare reports that are clear and complete based on reliable and relevant information after appropriate analysis. b. Confidentiality: The management accountant must refrain from disclosure of confidential information except when authorized and legally obliged to do so. c. Integrity: The management consultant must avoid both apparent and actual conflicts of interests and must refrain from activities that would prejudice the accountants ability to execute his ethical duties. He/she must refrain from any behaviour that would discredit his/her profession. d. Objectivity: The management accountant must communicate information fairly and objectively and must disclose fully all relevant information that could reasonably be expected to influence an intended users understanding of the financial reports and disclosures. Sustainable Corporate Finance: Sustainable Corporate Finance (SCF) is a multi-attribute approach in which financial, social, and environmental elements are interrelated and integrated. The necessity of introducing an ethical framework, into sustainable corporate finance can be explained by the character of finance as a discipline. If economics is defined as the allocation process of real goods and income, then financial transactions are definition intermediate, because they are not an end in themselves in the real economic process. Monetary and financial systems must be neutral in nature in the economic growth process. The traditional finance approach is rational and intuitively attractive in the sense that it enhances operational and theoretical simplicity. In the concept of sustainable corporate finance the (normatively chosen) goal of financial policy is sustainability, specified as a policy of caring for future generations. From this perspective sustainable corporate finance is creation and adoption of financial policies that strive for triple bottom line performance measurement with human actors that opt for maximising human benefit. It follows are stakeholder approach rather than a shareholder approach, and considers the shareholders are merely one amongst the many stakeholders.

IX.

Ethical Investing: Ethical investing is a set of approaches which include social or ethical goals or constraints as well as more conventional financial criteria in decisions over whether to acquire, hold or dispose of a particular investment. Social investment consists of a number of activities such as community investment (investment in local development initiatives) and shareholder activism. However, the most prevalent form of ethical investment is the ethical mutual fund investments. Since 1980s several factors may have contributed to the growth of social/ethical investment:

Business Ethics SMART PLAN (End Term Submission)

a. Growing investor concerns over issues such as environment, labour, repressive regimes, product safety and tobacco. b. Growth of business ethics and CSR. c. Growing evidence that ethical funds produce greater returns. d. Growth of sustainability indices To help ensure that ethical investing remains ethical an ethical screen or code of ethics for all ethical investments (especially ethical mutual funds) should be developed and utilized and adopted by organizations. Only when the ethical movement is ethically screened can it be deemed ethical. X. Ethics of Auditing: Accountancy and auditing are complex and technical processes. Ethics, in contrast, might be considered relatively simple. The difficult part of ethics, it may be argued, is not knowing what we ought to do, but getting ourselves, and others, to do the right thing. Truthfulness, honesty, care, loyalty and integrity: we know what they require, but we do not know if and how these requirements can be met. If this is indeed the case, and we want to promote ethical auditing, then we need to attract decent people into the profession, train them well, and not subject them to more temptation than they can cope with. Determining what is and is not ethical in auditing turns out not to be simply a matter of detecting fraud, corruption and other criminal conduct. Ethical disagreement about auditing arises, in part, because there is no agreement as to what the central purpose of an audit is. In raising the complex interrelationship of issues concerning how auditors ought to behave, what rules and principles they ought to adopt and follow, and how to promote a culture in which we can expect compliance with these norms, it is helpful to classify the ethical issues that arise in relation to auditing by distinguishing three spheres of activity; (1) the practice of auditor(s), (2) the management and culture of auditing firms, and (3) the setting of auditing standards and laws. It is essential that auditors are independent and impartial, not only in fact but also in appearance. Auditors have an obligation to refrain from becoming involved in all matters in which they have a vested interest. Auditors should protect their independence and avoid any possible conflict of interest by refusing gifts or gratuities which could influence or be perceived as influencing their independence and integrity. Auditors should not use their official position for private purposes and should avoid relationships which involve the risk of corruption or which may raise doubts about their objectivity and independence.