ACCA SBR ^INT Syllabus A. Fundamental Ethical And Professional Principles - Compliance & Integrity Based Approaches - Notes ^{4 / 11}

A compliance-based approach is all about following the law. It means a company sets up systems and rules to make sure they never break the law, and if they do, they'll catch it quickly and punish the people responsible.

They use things like rulebooks, checking contracts, having strict punishment rules, and ways for employees to whistle blow

But the problem is, just because something is legal doesn't mean it's the right thing to do.

For example, if a company doesn't get in trouble for polluting the environment, they might keep doing it even if it's bad for the planet.

This approach makes people follow the rules because they're scared of getting in trouble, not because they believe it's the right thing to do.

An integrity-based approach means a company must follow the law and also make sure its leaders take responsibility for making sure everyone in the company acts ethically (doing the right things).

Companies that follow this approach often have programs about ethics. These programs help everyone understand what's right and what's wrong, usually with written rules and training to help people make good choices.

Here's what these ethics programs aim to do:

1. Have people in charge of managing ethics.

2. Keep checking if the company is doing the right ethical things.

3. Set rules about how everyone in the company should behave.

4. Make sure people's actions match the rules.

5. Help everyone understand ethical problems.

6. Include ethical rules in decision-making.

7. Create ways to solve ethical problems when they come up.

Some companies even have an ethics committee or someone called an ethics ombudsman to help make sure everyone follows the rules and values of the company.

This approach is all about making ethics part of the company's culture.