ACCA Applied Knowledge · Business and Technology · Corporate codes of ethics
A company's code of ethics lists detailed rules on gifts, expenses and conflicts of interest, but says nothing on situations outside those rules. Which is the most likely weakness of this rules-based approach?
The most likely weakness is that employees may treat anything not expressly prohibited as acceptable. A rules-based code cannot anticipate every situation, so gaps arise in new circumstances where judgement and ethical values are needed.
- AEmployees may assume that anything not expressly prohibited is acceptableCorrect
- BEmployees will be unable to understand any of the rules
- CThe company will be unable to discipline anyone for any breach
- DStakeholders will lose all interest in the company
Explanation
Rules-based codes can encourage a box-ticking attitude, where behaviour not specifically covered is treated as permitted. This leaves gaps in new or unusual situations. The other options are extreme and not implied by the weakness.
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