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ACCA Applied Knowledge · Business and Technology · Corporate codes of ethics

A company's board is drafting a corporate code of ethics for all employees. Which of the following is the most appropriate purpose of including a section on how employees can report suspected breaches of the code confidentially?

The purpose is to encourage employees to raise concerns safely, which helps embed the code's values in everyday behaviour. Confidential reporting makes breaches visible and shows commitment from the board. It does not shift legal responsibility from directors, nor is it intended to create continuous monitoring of staff.

  1. ATo transfer legal responsibility for any breach from the directors to the employee who reports it
  2. BTo encourage employees to raise concerns and so support embedding the stated values in day-to-day behaviourCorrect
  3. CTo ensure that every employee is monitored continuously by the internal audit function

Explanation

A code is effective only if it is put into practice. Confidential reporting channels, such as whistleblowing procedures, encourage staff to raise concerns without fear of reprisal, which helps embed the values. Responsibility for the code stays with the board, so the first option is wrong. Reporting routes are not designed for continuous monitoring by internal audit, so the third option is also wrong.

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