Question) The management of ethics in organisation have implications for that organisation’s reputation. Examine the notion of reputational damage in the case study above against the different modes of ethics management.
Case Study
The Accounting Sector in South Africa:
The accounting sector is the guarantor of financial reporting standards and performs a critical function in the economy. Although well-established and anchored by the world's largest accounting firms, the auditing profession has been mired in controversies relating to fraud and financial irregularities involving its clients. These have highlighted the shortcomings of the external audit and various stakeholders have called for audit reforms. Regulatory changes that are set to disrupt the industry include the mandatory rotation of auditors, which is scheduled to come into effect on 1 April 2023.
Reputational Damage:
Poor accountability, specifically the failure of certain major auditing firms to report financial malpractice and fraud involving private companies and public entities, has resulted in a credibility crisis for the auditing profession. Major firms have implemented controls including audit quality monitoring systems, integrity checks, whistle-blowing initiatives and publication of annual transparency reports. The large firms' increased reticence to take on clients who present an elevated risk is expected to drive many clients to smaller accounting firms.
Question)
The management of ethics in organisation have implications for that organisation’s reputation. Examine the notion of reputational damage in the case study above against the different modes of ethics management.
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