Ethics, controls, and the resource management community: this article discusses the basic principles of United States Government ethics and explores how they apply to resource and financial management organizations.What are the basic ethical principles of the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. Government? There are a number of them, and they appear in a series of Executive Orders. (1) But the following quote from one of the orders captures the essence of ethics for federal government employees: "Public service is a public trust, requiring employees to place loyalty to the Constitution, the laws, and ethical principles above private gain."
This basic principle and the other government ethics principles have been translated into elaborate rules governing a variety of conduct. Rules specify behavior for government employees regarding issues such as conflicts of interest, travel, participation in nongovernmental conferences, gifts from both government and private groups, off-duty employment, and many others.
Ethical Problems Persist
In spite of these rules, some government employees continue to suffer ethical lapses. At the extreme these lapses include specific criminal actions, such as the ethical misconduct of a senior Air Force procurement official that resulted in a jail sentence jail sentence jail n → peine f de prison . But ethical violations also include offenses that do not result in criminal convictions, such as Antideficiency Act violations that are of particular concern to the re source management community. Even the perception of impropriety can raise doubts regarding commitment to ethical principles.
Treating ethical behavior as a legal issue--"It's okay if I don't get caught"--can make the problem worse. The legalization LEGALIZATION. The act of making lawful.
2. By legalization, is also understood the act by which a judge or competent officer authenticates a record, or other matter, in order that the same may be lawfully read in evidence. Vide Authentication. of ethical behavior can cause people to operate on the margin of what is or is not legal. A culture of gamesmanship games·man·ship
1. The art or practice of using tactical maneuvers to further one's aims or better one's position: can result, where employees attempt to bend the rules to meet either their personal or their organizational needs. They may forget the basic point: Federal employees must follow both the spirit and the intent of government ethics principles.
Ethics problems are of course not only a problem in government. Recent accounting scandals Accounting scandals, or corporate accounting scandals are political and business scandals which arise with the disclosure of misdeeds by trusted executives of large public corporations. at private corporations--including Enton, Sunbeam, Waste Management, and others--make clear that accounting systems, regulations, and auditors have not prevented major ethical and legal problems in the private sector. Arthur Levitt, the former chairman of the Securities and Exchange Commission, made this point in an interview after the Enron scandal The Enron scandal was a financial scandal that was revealed in late 2001. After a series of revelations involving irregular accounting procedures bordering on fraud, perpetrated throughout the 1990s, involving Enron and its accounting firm Arthur Andersen, it stood at the verge of broke:
"I think the Enron scandal is symptomatic of something much broader than Enron. I think it's symptomatic of a breakdown of the ethical values of business over a period of perhaps 20 years, a gradual erosion of business ethics business ethics, the study and evaluation of decision making by businesses according to moral concepts and judgments. Ethical questions range from practical, narrowly defined issues, such as a company's obligation to be honest with its customers, to broader social that brought us to an Enron, but might very well bring us to a whole host of Enrons as we move down the road.
"There is much too much accounting hocus-pocus. I would not say that every American company practices this. It's a matter of degree. Many companies do practice accounting hocus-pocus. And accounting standards are insufficiently clear to make that argument hard and fast, so companies will argue the point as to whether their treatment is fair or not fair." (2)
This article focuses on government ethics rules, which should govern the behavior of all those working for the federal government and for all the employees of the Department of Defense (DoD). While these rules apply to all, they should be of particular concern to those in resource and financial management organizations. We are the stewards of government funds and have a higher obligation to meet both the letter and the spirit of ethical principles. Given our stewardship role, we must always keep in mind the Latin quote: "Quis custodiet ipsos custodes?" (Who will guard the guards?). (3)
Characteristics of an Ethical Organization
If ethical behavior and creating ethical organizations represent all-important factors for resource management professionals, how will they know when they have succeeded? Stated differently, what constitutes an ethical organization?
Ethical organizations have been defined in a multitude of ways, but all should exhibit three characteristics: a commitment to compliance and not evasion EVASION. A subtle device to set aside the truth, or escape the punishment of the law; as if a man should tempt another to strike him first, in order that he might have an opportunity of returning the blow with impunity. ; transparency; and accountability. These characteristics are interrelated in·ter·re·late
tr. & intr.v. in·ter·re·lat·ed, in·ter·re·lat·ing, in·ter·re·lates
To place in or come into mutual relationship.
in and interdependent in·ter·de·pen·dent
Mutually dependent: "Today, the mission of one institution can be accomplished only by recognizing that it lives in an interdependent world with conflicts and overlapping interests" . If all conditions prevail in an organization, adherence to the Code of Government Ethics is ensured.
Commitment to Compliance
A recent article in The New York New York, state, United States
New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of Times, datelined Baghdad, Iraq, July 29, 2006, clearly indicates that not all federal employees are adhering to the first characteristic:
"The State Department agency in charge of $1.4 billion in reconstruction money in Iraq used an accounting shell game to hide ballooning cost overruns Noun 1. cost overrun - excess of cost over budget; "the cost overrun necessitated an additional allocation of funds in the budget"
cost - the total spent for goods or services including money and time and labor on its projects in Iraq and knowingly withheld information on schedule delays from Congress, a federal audit released late Friday has found. The agency hid construction overruns by listing them as overhead or administrative costs administrative costs,
n.pl the overhead expenses incurred in the operation of a dental benefits program, excluding costs of dental services provided. , according to according to
1. As stated or indicated by; on the authority of: according to historians.
2. In keeping with: according to instructions.
3. the audit, written by the Special Inspector General for Iraq Reconstruction On November 6, 2003 the United States Congress created the appointed position Inspector General of the Coalition Provisional Authority. Stuart Bowen was appointed to this position on January 20, 2004. , an independent office that reports to Congress, the Pentagon and the State Department." (4)
Commitment to compliance and not evasion has become more complicated as DoD and its subordinate activities "cash-flow" the Global War on Terrorism Terrorist acts and the threat of Terrorism have occupied the various law enforcement agencies in the U.S. government for many years. The Anti-Terrorism and Effective Death Penalty Act of 1996, as amended by the usa patriot act . Many times resource and financial managers are faced with the dilemma of mission accomplishment versus legal compliance. How do we resolve these issues and remain an ethical organization?
Ethical organizations first acknowledge that there is a problem--they do not attempt to cover it up. Then they openly look for ways both to accomplish the mission and to comply with the law. We cannot become too creative and employ the equivalent of what Arthur Levitt termed the hocus-pocus accounting tricks that caused disasters in the private sector. But we should also not view issues as "either-or." We must take the time to think creatively about how to meet mission needs while remaining legally compliant.
The approach of "openly looking for Looking for
In the context of general equities, this describing a buy interest in which a dealer is asked to offer stock, often involving a capital commitment. Antithesis of in touch with. ways" to achieve compliance highlights the second characteristic of an ethical organization--transparency. Transparency is the ultimate control that ensures that we do the right thing. It has been said that if all our organization's activities were constantly on television, there would be no more ethical problems.
Transparency allows others to observe what and how we are thinking and acting. Pursuing transparency serves two essential purposes. First, it prods us constantly to ask the question: Would we like to see our decision dissected dis·sect·ed
1. Botany Divided into many deep, narrow segments: dissected leaves.
2. Geology Cut by irregular valleys and hills.
Adj. 1. on the front page of The Washington Post?
Second, transparency allows our subordinates to see the decision-making process. Our role as leaders in dealing with our subordinates is much like our role as parents. It really does Warren Trotter, better known as Really Doe, is an American rapper from Chicago, Illinois. He is affiliated with Kanye West and his G.O.O.D. Music family and label. Discography
Transparency also has another benefit: It increases the probability of compliance by subordinate organizations A subordinate organization is one that is under control of the central organization.
According to the United States IRS Publication 557 (Rev. July 2001), Tax-Exempt Status for Your Organization - Chapter 1 Page 6, this is the definition for a . Too often we make decisions behind closed doors and publish the results as guidance to subordinate commands A command consisting of the commander and all those individuals, units, detachments, organizations, or installations that have been placed under the command by the authority establishing the subordinate command. and activities. Subordinate activities often resist the guidance because they have been excluded from the process and do not understand the intent of the guidance. Transparency is a means to ensure inclusion and understanding of intent. In the tactical world, commanders go to great lengths to ensure that everyone in the chain of command understands the "commander's intent A concise expression of the purpose of the operation and the desired end state that serves as the initial impetus for the planning process. It may also include the commander's assessmentof the adversary commander's intent and an assessment of where and how much risk is acceptable during ." In the administrative world we sometimes ignore this principle and instead simply direct people to comply. Ethical organizations are open and encourage discussion before decisions are made.
The third characteristic of an ethical organization is accountability.
Accountability means someone is responsible and accountable for the results. It also means that some action is taken when something goes well or something goes wrong. Ethical organizations openly "pin the flower" on someone and hold him or her accountable. It involves both responsibility and accountability.
The ultimate test of an ethical organization is what action it takes when someone does something wrong that results in a good outcome. Do we give the person a letter of reprimand A letter of reprimand is a letter to an employee or soldier from his or her superior that details the wrongful actions of the person and the punishment that can be expected. A formal letter of reprimand is one in which a copy of the letter is kept on record. ? Do we give him or her an award? Do we do nothing? If the good outcome results in additional resources for our command, there is the question of what do we do with the resources? Do we keep them? Give them back? Something else? The answers are not easy, but they demonstrate our commitment to ethical principles.
The Role of Controls
Knowing the basic characteristics of an ethical organization is not enough. How do we ensure that the organization acts as it is supposed to? Knowing and doing are two very different acts. Compliance requires more than faith. We cannot just assume that people and organizations will do the right thing and act ethically. The pressure to cash-flow wars and the potential for personal gain will cause some people to act unethically. We must always keep in mind that question: "Quis custodiet ipsos custodes?"
To ensure an ethical organization, we must institute internal controls; without them we have a system based on faith and hope. A detailed discussion of internal controls goes beyond the scope of this article. However, at their heart, internal controls are rather simple. They involve three basic functions:
* Setting standards of satisfactory performance
* Checking results to how they compare with standards
* Taking corrective action A corrective action is a change implemented to address a weakness identified in a management system. Normally corrective actions are instigated in response to a customer complaint, abnormal levels if internal nonconformity, nonconformities identified during an internal audit or where actual results do not meet standards
* The principles of ethical organizations and associated controls must, of course, be crafted to meet the needs of a particular organization. Standards must be established and engrained into the organizational culture This article or section is written like an .
Please help [ rewrite this article] from a neutral point of view.
Mark blatant advertising for , using . . Mechanisms must be established to monitor compliance and action taken when the standards are not met.
Clearly, establishing and maintaining an ethical organization requires a lot of work. Principles must be crafted and adhered to; internal controls must be established. The question can be asked: Who cares? Given the current environment, why should my organization try to be ethical? Everyone else is breaking and bending the rules; it's the way the game is played.
The answer is credibility and trust. Our success as resource and financial managers is defined in these terms. If we do not have credibility and trust, our commanders will not believe us and our subordinate units and activities will not trust us. As we continue to cash-flow the Global War on Terrorism, we continue to make promises. The validity of those promises is based solely on our credibility. Ethical organizations build trust, and trust is essential in these difficult times.
In sum, ethical organizations should have a commitment to compliance and not evasion, transparency, and accountability. And these factors must be ensured by internal controls. The benefit for the effort is trust and credibility, without which no organization can succeed.
(1) The rules are contained in Executive Order (E.O.) 11222, E.O. 12674, as modified by E.O. 12731, 3 C.F.R., 1990 Comp. p. 306-311; 5 C.F.R. [section] 2635.101
(2) From a PBS PBS
in full Public Broadcasting Service
Private, nonprofit U.S. corporation of public television stations. PBS provides its member stations, which are supported by public funds and private contributions rather than by commercials, with educational, cultural, FRONTLINE front·line also front line
1. A front or boundary, especially one between military, political, or ideological positions.
2. Basketball See frontcourt.
3. Football The linemen of a team. interview with Arthur Levitt, former SEC chairman, March 2, 2002
(3) Juvenal, On Women, p. 127
(4) The New York Times, July 30, 2006