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

Which of the following statements about the limitations of corporate codes of ethics is correct?

A code is undermined when senior managers act contrary to it or when reward systems encourage the opposite behaviour, because staff then see it as insincere. Consultation improves commitment, codes are not automatically law, and whistleblowing procedures are still needed.

  1. AA code which is written by senior management and imposed without consultation is likely to gain greater commitment than one developed with staff input
  2. BA code is enforceable in law in every jurisdiction simply because it has been published
  3. CA code may be undermined if senior managers visibly act contrary to it or if reward systems encourage the opposite behaviourCorrect
  4. DA code removes the need for whistleblowing procedures

Explanation

If leaders breach the code or bonuses reward results at any cost, employees receive mixed messages and the code loses credibility. Consultation usually increases commitment, so the first option is wrong. Codes are not automatically legally enforceable, and whistleblowing procedures remain useful alongside them.

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