Business Finance
FIN 340 Penn State University Chapter 2 Ethical Audit Aramco Co Essay

fin 340

Penn state university

FIN

Question Description

I need an explanation for this Business question to help me study.

hi

i need project for business ethics subject (report+powerpoint presentation ) and it should about SAUDI Co i choose Aramco co

i uploaded the project guidelines please follow it . and i uploaded the slides of the chapters as your reference it might help u .

so you can use some vocabulary from the course slides .


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ETHICS 301 PROJECT: ETHICAL AUDIT Second Semester 2020 Dr. Rhada Boujlil Grades: 20% Due: April 6th Ethical auditing is a process which measures the internal and external consistency of an organisation's values base. The key points are that it is value-linked, and that it incorporates a stakeholder approach. Its objectives are two-fold: It is intended for accountability and transparency towards stakeholders and it is intended for internal control, to meet the ethical objectives of the organisation. The value of the ethical audit is that it enables the company to see itself through a variety of lenses: it captures the company's ethical profile. Companies recognise the importance of their financial profile for their investors, of their service profile for their customers, and of their profile as an employer for their current and potential employees. An ethical profile brings together all of the factors which affect a company's reputation, by examining the way in which it does business. By taking a picture of the value system at a given point in time, it can: - clarify the actual values to which the company operates - provide a baseline by which to measure future improvement - learn how to meet any societal expectations which are not currently being met - give stakeholders the opportunity to clarify their expectations of the company's behaviour - identify specific problem areas within the company - learn about the issues which motivate employees - identify general areas of vulnerability, particularly related to lack of openness An ethical culture is supported by top management, has incorporated ethics at all levels of the organization, and contains all of the components of an Ethics Program. Task Details: Working as a group, you need to study one organization/company of your own choice and do a search pertaining to the topics on the ethical audit list. 1. Write an introduction (i) a brief discussion on the background of the company you have selected ; (ii) a list of major players and changes in the organisation; (iii) key recent changes (5years) in the industry your chosen company is located for the last 5 years 2. You need to study and discuss the company’s ethical audit in detail within your group. A sample assessment questionnaire for the project follows: Support by top management - Has management established an ethical “tone at the top” by setting a good example of ethical conduct, providing positive and open communication, and supporting ethical conduct? - Is there a designated ethics officer or ethics contact? - Does the ethics code start with a statement from the CEO/President about his commitment to an ethical culture? - Does top management positively support the ethics hotline? Incorporation of ethics at all levels of the organization - Are supervisors trained as contact points for ethics related questions? - Is ethics a focus during new employee training? - Is ethics a focus during supplier selection? - Is ethics a focus during internal audits? - Is an ethical culture ingrained in the organization’s brochures, materials, and website? Components of an Ethics Program Ethics Code - Does the organization have a written ethics code? - Does the ethics code cover key elements, such as conflicts of interest, financial irregularities, and compliance to laws? - For publicly traded companies, is the ethics code available publicly / on the company’s website Ethics Training - Do employees receive ethics training on a regular basis? - Does ethics training incorporate the company’s ethics code? Ethics Hotline - Does the organization have an ethics hotline? - Is the ethics hotline confidentiality and non-retaliation policy clearly conveyed to employees? - Does the organization provide ethics hotline information to employees and other shareholders via formats such as postings in break rooms and the company website? - For publicly traded companies, is the “receipt, retention, and treatment” of ethics hotline reports regarding “questionable accounting or auditing matters” aligned with the Audit Committee Ethics Awareness - Is the importance of ethics communicated to all employees on a regular basis via formats such as organization newsletter articles and posters? - Do the ethics articles cover topics that are interesting, engaging, and in pace with the times? 3. PLEASE KEEP IN MIND that it is impossible to produce an acceptable report if you have not researched widely. Some have failed the assignment because of lack of sufficient research, so it is important to start work on it early. Report should be maximum 15 pages in length and attach all the supplementary material (such as company info, Code of Ethics, etc.) with your report. Chapter 1 The Importance of Business Ethics ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. Learning Objectives  Explore conceptualizations of business ethics from an organizational perspective  Examine the historical foundations and evolution of business ethics  Provide evidence that ethical value systems support business performance  Gain insight into the extent of ethical misconduct in the workplace and the pressures for unethical behavior ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 2 Intro  The ability to anticipate and deal with business ethics issues has become a priority in the 21st century.  Demand for improved business ethics, greater corporate responsibility, and laws.  Highly visible business ethics issues influence the public’s attitude toward business.  Making good ethical decisions are just as important to business success as mastering management, accounting, marketing or financial management. ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 3 Intro  Ethical behavior requires understanding and identifying issues, areas of risk, and approaches to making choices in an organizational environment.  The field of business ethics deal with question about whether specific conduct and business practices are acceptable.  A salesperson omitting facts about a product’s poor safety  An accountant reporting inaccuracies in an audit report  A manufacturer intentionally concealing a safety concern to avoid a massive recall  By its very nature, the field of business ethics is controversial.  Values and judgments play a critical role in the making of ethical decisions.  All organizations have to deal with misconduct, even the most prestigious companies and organizations. ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 4 About this Chapter  Overview of business ethics.  Definition of business ethics and discusses why it has become an important topic in business education.  Evolution of business ethics in North America  Benefits of ethical decision making in business.  Framework for examining business ethics in this text. ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 5 Business Ethics  Business ethics comprises organizational principles, values, and norms that originate from individuals, organizational statements, or from the legal system that guide individual and group behaviour in business  Morals: a person’s personal philosophies about what’s right or wrong  Principles: Specific boundaries that should not be violated and become the basis for rules  Values: Existing beliefs and ideals that are socially enforced. Often based on organizational best practices (teamwork, trust, integrity)  Ethics - Behavior or decisions made within a group’s values by a group of people representing the business organization. ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 6 Business Ethics  Businesses should hire employees with sound moral principle. However, some special aspects need to be considered when applying ethics to business:  1. Businesses must earn a profit to survive, but these profits should not come from misconduct.  2. To be successful, businesses must address the needs and desires of stakeholders.  To address these unique aspects of the business world, society has developed rules, both legal and implicit, to guide businesses in their efforts to earn profits in ways that help individuals or society and contribute to social and economic well-being. ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 7 Why Study Business Ethics? A Crisis in Business Ethics  1. Ethical misconduct is a major business concern, and organizations are under greater scrutiny than ever by  The case of JP Morgan Chase  The conflict between U.S. regulators and Swiss banks  see figure 1.1  2. There is no doubt negative publicity associated with major misconduct lowered the public’s trust in certain business sectors.  3. Decreased trust leads to a reduction in customer satisfaction and customer loyalty, which in turn can negatively impact the firm or industry. ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 8 Figure 1.1 - Global Trust in Industry Sectors ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 9 Issues to Be Addressed to Prevent Misconduct Misuse of company resources Abusive behaviour Employee theft Product knockoffs Issues to be addressed Harassment Accounting fraud Bribery Defective products Conflicts of interest ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 10 Specific Issues  Misuse of company resources, abusive behavior, harassment, accounting fraud, conflicts of interest, defective products, bribery, and employee theft are all problems cited as evidence of declining ethical standards in business and in other areas like government or sports.  Product knockoffs: products that imitate physical appearance of other products although not copying the brand name or logo (AliBaba in China)  Accounting fraud: intentionally manipulating financial statements (Enron)  Bribery: giving or receiving something of value in exchange of an influence (NOLA Mayor, College Admission Scandal)  Abusive behaviour: aggressive, controlling, destructive acts (Domestic abuse by NFL stars and Pop stars)  Harassment: aggressive pressure or intimidation: (Physical, Psychological, Cyberbullying, HWE vs Quid pro Quo (USA Gymnastic National Team scandal, #MeToo Movement) ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 11 Specific Issues  Misconduct can occur in any organization (private companies, the public sector, military, sports, Showbiz, etc)  Regardless of an individual’s beliefs about a particular action, if society judges it to be unethical or wrong, new legislation usually follows.  Whether correct or not, that judgment directly affects a company’s ability to achieve its business goals ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 12 Reasons for Studying Business Ethics Improves an individual’s personal ethics when applying them within a business context Helps in addressing business-strategy decisions that are complex and detailed Ensures collective agreement of organizational ethics Helps people with limited experience in making organizational decisions about product quality, advertising, pricing, sales techniques, hiring practices, etc. Helps one identify and resolve ethical issues in a quick manner ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 13 The Distinctive Stages of Business Ethics in North America Before 1960: Ethics in Business (theology) The 1960s: The rise of Social Issues in Business The 1970s: Business Ethics as an Emerging Field The 1980s: Consolidation The 1990s: Institutionalization of Business Ethics ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 14 Before 1960: Ethics in Business (theology)  Ethical issues related to business were often discussed within the domain of theology or philosophy.  Religious leaders raised questions about fair wages, labor practices, and the morality of capitalism.  The first book on business ethics was published in 1937 and covered 4 sections:  Fair service, fair treatment of competitors, fair price, moral progress in the business world.  Also demonstrated the necessity of the ethical treatment of different stakeholders. ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 15 The 1960s: The rise of Social Issues in Business  The American society witnessed the development of anti-business trend b/c many critics attacked the vested interests that controlled the economic and political aspects of society.  Decay of inner cities and growth of ecological problems such as pollution .  1962’s Consumer Bill of Rights: outlines 4 basic consumer rights (safety, information, choice, and to be heard).  Activities that could destabilize the economy or discriminate against any class of citizens began to viewed as politically unethical and unlawful. ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 16 The 1970s: Business Ethics as an Emerging Field  Business ethics began to develop as a field of study.  Universities began to teach about corporate social responsibility (an organization’s obligation to maximize its positive impact on stakeholders and minimize its negative impact).  Conferences were held to discuss the social responsibilities and ethical issues of business.  By the end of this era, major ethical issues have emerged (bribery, deceptive advertising, price collusion, product safety)  Business ethics became a common expression and academic researchers began to identify ethical issues and describe how business people might choose to act in particular situations. ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 17 The 1980s: Consolidation  Business academics, practitioners, and centers for business ethics provided publications, courses, conferences and seminars.  The Defense Industry Initiative on Business Ethics and Conduct (DII) was developed to guide corporate support for ethical conduct.  This era witnessed the rise of self-regulation as being in the public’s interest rather than regulation by government.  Many tariffs and trade barriers were lifted, and businesses merged and divested within an increasingly global atmosphere. ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 18 The 1990s: Institutionalization of Business Ethics  Administration continues supporting self-regulation and free trade.  However, many reforms were abolished (Arthur Levitt, SEC 1993)  Federal Sentencing Guidelines for Organizations (FSGO) set the tone for organizational ethical compliance programs in the 1990s.  The guidelines focus on firms taking action to prevent and detect business misconduct in cooperation with government regulation. ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed ...
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Running head: Ethical Audit: Saudi Aramco co

Ethical Audit: Aramco co
Student
Instructor
Course
Date

2

Ethical Audit: Saudi Aramco co

INTRODUCTION
This section discusses the background of the Saudi Aramco Company, the major players,
and the changes in the organization. It also explains recent fundamental changes in the industry
for the last five years.
Background of the company
Saudi Aramco is located in Dhahran in Saudi Arabia and deals with natural petroleum
and gas. It is considered to be one of the largest companies concerning the revenues collected.
Among the oil production companies, Saudi Aramco is the biggest, and globally, it is termed to
the most profitable. It was started in the year 1933, and it's an international company serving
many markets across the globe. The president and CEO is Amin H. Al-Nasser, and Yasri AlRumayyan is the executive director. As of 2018, the company had total revenue of $355.9
billion, which had been increasing from past years. By June 2018, the company had $111.1
billion net income, which was an increase from $75.9 billion by 2017 (Aramco Accounts, 2018).
By 2019, the operating income was $674.8 billion, and the company has total assets of 1.5
trillion as of the end of the year 2019. Saudi Arabia's government owns the company, and as of
today, it has approximately 76,000 employees (Key facts and figures, 2017). The master gas
system is the biggest hydrocarbon network and is operated by Saudi Armco. It has over one
hundred fields for gas and oil with Saudi Arabia.
In 1938, some of the United States Companies joined Saudi Aramco after they discovered
that there was a lot of oil in Dhahran. The company has an adequate infrastructure that enhances
high levels of production, and the employees are well knowledgeable and experienced with what

Ethical Audit: Saudi Aramco co

3

they do. It produces an estimate of 10.2 million barrels per day. Some of its subsidiaries are
located in the United States, United Kingdom, China, Egypt, India, Japan, Singapore, and the
Netherlands. In 2012, Aramco faced a cyber-attack after the systems were hacked, but
fortunately, the attacked computers were not part of the oil production. Around 30,000 work
stations were affected, and a group called cutting sword of justice claimed to have caused all that
mess. This brought some delays as the company had to concentrate on bringing back its systems
to normal. Besides, Houthi rebels attacked the company with the use of drones, and this affected
the supply and production of oil since around 5% of the world supply was cut.
Major players and changes in the organization
Other players in the industry include British Petroleum, which was founded in 1909, a
public entity majoring in oil and petrochemical production. It is located in London and has
around 73,000 employees, with estimated revenue of $282.6 billion in 2019. Exxon Mobil is also
a critical player that focuses on the production of natural gas and crude oil. It is the earliest
founded company in 1870, located in Irving, United States. The employees stand at around
74,900, with a revenue of $264.9 billion by 2019. Marathon is another player in the industry
founded in 2009 and is the youngest among the key competitors in the market and the ones that
have been discussed here. It is situated in Findlay in the United States. The employees are about
60,350 and have a revenue of $123.9 billion by 2019. Total also stand among the key players and
is located in Paris, founded in 1924 and has more employees of over 102,168 with total revenue
of $172.3 billion. ADNOC was founded in 1971 and the most significant rival for Aramco’s
despite having a small share in the market and re...

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