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

Which of the following is the main purpose of a corporate code of ethics?

A corporate code of ethics exists to set out the values and standards of behaviour expected of directors and employees. It guides decisions and conduct. It does not guarantee profit and does not replace legal requirements, which the organisation must still comply with.

  1. ATo guarantee that the organisation will make a profit each year
  2. BTo set out the values and standards of behaviour expected of directors and employeesCorrect
  3. CTo replace the need for any laws or regulations that apply to the organisation

Explanation

A corporate code of ethics communicates the organisation's values and the standards of conduct expected from its people. It cannot guarantee profit, and it does not replace legal compliance, which is still required regardless of the code.

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