1. Presentation to Williamsburg Fraud Conference
Wednesday, April 25, 2018
Lyndon S. Remias, CPA, CIA
City Auditor

2. Welcome to Ethics Training!
“The reputation of a thousand years is determined by the conduct of one hour.”
– Japanese proverb

3. Training Objectives
Promote Understanding – Talking about ethical conduct may not take hold without training.
Improve Standards – Routine training in business ethics teaches everyone to practice ethical behavior.
Self-Defense – Good ethics training promotes integrity and keeps everyone operating within the law.
Practice – Ethics training exercises take the general principles your organization values and applies them to specific situations, preparing them for challenges ahead.

4. Ethics
The embodiment of those values that the person or organization feels are important… and spell our proper conduct and appropriate action.
- Merriam Webster

6. Ethical Choices
What you find is that the tough ethical choices are not between good and evil, but rather between two goods:
Truth versus Loyalty
Individual versus Community
Short-term versus Long-term
Justice versus Mercy

7. IIA Ethics Principles
Integrity
Objectivity
Confidentiality
Competence

8. City of Virginia Beach Principles of Ethical Conduct
INTEGRITY - We act with honor, courage, fairness, and truthfulness, without bias or impropriety. ACCOUNTABILITY - We provide quality services by holding others and ourselves to the highest standards while taking responsibility for the efficient and effective use of resources. RESPECT - We treat everyone with courtesy, dignity, and kindness, appreciating the diversity and uniqueness of all. PROFESSIONALISM - We foster a culture of excellence and loyalty by our actions and through organizational, vocational, and personal growth. CITIZENSHIP - We uphold federal, state, and local laws, while embracing the Organizational Mission and Values, to protect the public interest and make our community a better place to live and work.

9. Relevant Ethical Principles
Objectivity
Selflessness
Stewardship
Transparency
Integrity

10. 1. Objectivity
Employees must place their customers’ and stakeholders’ interest before any private interest or outside obligation - choices need to made on the merits.

11. 1A. Conflict of Interest
A conflict of interest occurs when you have a private interest that may benefit from your actions, or when a private interest could interfere with official duties. An interest need not be financial to create a conflict of interest. Most conflicts result from the exercise of discretionary authority.

12. Examples of Potential Workplace Conflicts of Interest
These examples illuminate the true nature of what a conflict of interest really means.
A relative or close friend reports to a supervisor who affects their job responsibilities, salary, and promotions.
A male manager dates a female employee who reports to him or vice versa.
A lawyer represents a client in a civil dispute while accepting fees from litigants who hold the opposing point of view.
A purchasing agent hires his brother-in-law to provide vending services to the company lunch areas.
An employee who is a member of a company employee selection team fails to disclose that he is related to a job candidate whom the company team is considering for a position.

13. Examples of Potential Workplace Conflicts of Interest (cont’d)
An employee starts a company that provides similar services to similar clients as those of her full-time employer. This is especially a conflict of interest when an employer has had her sign a non- compete agreement.
A manager provides paid consulting services on the weekend to a company customer or supplier.
An employee works part-time in the evening for a company that makes a product that competes with the products of his full-time employer.
A member of the company board of directors accepts fees and provides advice to a company that is in direct competition with the company on whose board of directors he sits.

14. Examples of Potential Workplace Conflicts of Interest (cont’d)
An HR director decides to investigate a formal charge of sexual harassment, using internal resources that she controls, against a fellow corporate executive whom she has known and worked with professionally for years. This would not constitute a conflict of interest if she hired an external employment law firm to conduct the investigation and recommend disciplinary measures.
A purchasing agent accepts trips and gifts from a vendor and then selects the vendor's products for purchase by the company.
An employee accepts free gifts and free products from a training and development company and then recommends the purchase of these products without comparing them to comparable products from other vendors.
A CFO negotiates an agreement in his employer's best interests for a stock option plan from which he will directly benefit.

15. Examples of Potential Workplace Conflicts of Interest (cont’d)
A trainer is paid to provide training classes that teach customers how to use the company's software products. He puts up a website that offers his same training on the products as a for-profit enterprise in his spare time. Why would he ever again direct customers needing training to his company's classes?
The manager of a marketing department dated a coworker who is also a manager in the same department. They part ways over time but when he is promoted to the marketing department director role, she found herself reporting to him. The company was forced to change the reporting chain of the department she managed even though the manager and director were no longer dating. The existence of the former relationship created a potential conflict of interest especially in the eyes of coworkers.
An employee sets up a personal website on which he sells his employer's software products.

16. 1B. Business Ethic Thoughts
Instill a code of conduct at every level. Don’t just talk-the-talk, but walk-the-walk. An unethical environment can destroy its stakeholders and crumble an organization. Do you know the principles of ethical conduct for your organization?

17. 1C. Ethical Characteristics
Reliability and Dependability
Quality Productivity
Cooperation and Teamwork
Strong Leadership
Good Values
Integrity
Respect
Loyalty
Accountability
Non-Ethical
Safety Violations
Time Theft
Stealing
Employer Intimidation / Bullying
Sexual Harassment
Discrimination
(including Age, Race, Gender Bias)
Taking Credit for Work Not Yours
Disregard of Company Policies

18. Dilemma:
You are a health inspector with a partnership interest in a local restaurant, and are assigned to perform an inspection of this same restaurant. Can you conduct the inspection? What actions should you take?

19. Dilemma:
An employee serves on the board of directors for a non-profit organization. The non-profit bids on a contract from the employee’s agency. The employee serves on the review panel that will select the successful contractor. Can the employee serve on the review panel even though there is no personal benefit?

20. Dilemma:
You enforce business license requirements. You discover that a local business, with which you have a private legal dispute, is overdue in paying its taxes. What would you do?

21. 2. Selflessness
Employees should not make decisions in order to gain financial or other benefits for themselves, their family, or their friends.

22. 2A. Use of Position
An officer or employee, government or private, may not use his or her position to secure special privileges or to grant exemptions to benefit himself, herself, family members, or other persons.

23. 2B. Gifts
General Rules

24. Dilemma:
You receive a plaque and a $100 check from the Institute of Financial Managers for your many contributions to the field. Can you accept the plaque and the check?

25. Dilemma:
You supervise a contract with ABC Audits. ABC is sponsoring a regional conference and tells you that if you attend, ABC will waive your conference fees. Can you accept the waiver of conference fees?

26. Dilemma:
You are a local bank president and Mayor of your city. A private development project that is being financed by your bank comes before the city council for a vote.
What is the best course of action the Mayor should take?

28. Quote - Ethical Habits “A long habit of not thinking a thing
wrong gives it the superficial appearance of being right.”
–Thomas Paine

29. 3. Stewardship
Employees have a duty to conserve the organization’s or public resources and funds against misuse and abuse.

30. 3A. Ask Yourself
Will my use of resources result in added costs or any other disadvantage to my organization?
Am I using this resource in order to avoid personal expense?
Am I confident that my use of the resources will not compromise the security or integrity of organizational information or software?
Are resources being used for purposes that could be embarrassing for my organization if reported publicly?

31. 3B. The Use Zones
Employees have a duty to conserve the organization’s/public resources and funds
against misuse and abuse.
Green Zone – Official Duties
Yellow Zone – Personal Use Under Limited Circumstances
Red Zone – Prohibited Uses

32. 3C. The Green Zone Official Duties
Any Use that is Reasonably Related to Your Official Duties
Combined Fund Campaign

33. 3D. The Yellow Zone Personal Use OK Under Limited Circumstances
De minimis exceptions (about minimal things)
There is little or no cost to the organization.
There is no interference with the performance of your duties.
The use is brief in duration and frequency.
The use does not distract from the conduct of your organization’s business.
The use does not disrupt other employees and does not obligate them to make a personal use of your organization’s resources.

34. 3E. The Red Zone Prohibited Uses Outside business interests
Commercial uses
Illegal or unprofessional activities
Political activities, including lobbying

35. Dilemma:
You send s to your friend’s home computer from your office computer regarding personal plans for the weekend. Is this appropriate stewardship of the organization’s resources?

36. Dilemma:
You ran across an article in TIME magazine that you want to share with friends and make several copies using the office’s copier. Is this appropriate stewardship of the organization’s resources?

37. Dilemma:
You send an to your senator opposing the confirmation of a nominee for federal office.
Is this appropriate stewardship of the organization’s resources?

38. Dilemma:
Your supervisor approves the use of an office computer to do course work for a class that will enhance your skills. Is this appropriate stewardship of the organization’s resources?

39. Dilemma:
You send a brief or make a brief, local call to check on your kids.
Is this appropriate stewardship of the organization’s resources?

40. Dilemma:
You access the Internet during a lunch break to check on your stock portfolio and transfer assets to a different fund.
Is this appropriate stewardship of the organization’s resources?

41. Quote
“A perfect value consists in doing without witness all that we could have done in front of the entire world”
- Nobel Laureate Gabriela Mistral

42. 4. Transparency
Employees must practice open and accountable organization. They should be as open as possible about their decisions and actions, and protect truly confidential information.

43. 4A. Confidential Information
Standards that protect confidential information:
Outside employment, business, or professional activities
Disclosure for personal gain or benefit
Disclosure to unauthorized person

44. 4B. Public Records Standards for disclosure:
May not intentionally act to conceal a record if under a personal obligation to release the record.
May apply to communications

45. 5. Integrity
Employees, governmental and private, should not place themselves under any financial or other obligation to outside individuals or organizations that might influence them in the performance of their duties.

47. Dilemma:
In a case that ranks as the worst corruption scandal in Navy history, the Justice Department has charged 15 officers and one enlisted sailor who served on the Blue Ridge with taking bribes from or lying about their ties to Leonard Glenn Francis, a Singapore-based tycoon who held lucrative contracts to service Navy ships and submarines in Asian ports.

48. Quote
“If … you can’t be a good example, then you’ll just have to be a horrible warning.”
- Catherine Aird

49. 5A. Executive Ethics Board
Interprets and enforces the ethics law
Issues advisory opinions
Reviews agency ethics policies
Investigates and hears complaints
Imposes sanctions for violations
Disciplinary action also may be taken by the agency
Does your organization have an Ethics Board?

50. 5B. Good People - Bad Choices
Deadlines or performance goals
Lack of resources, human or otherwise
Pressures to produce and get the job done
The action is not really illegal or unethical
The action is in the individual’s or organization’s best interests
The action will never be discovered
Fear of authority

51. 5C. Briefly Daily decisions will guide us in crisis
Values can be instilled
Subordinates seek standards
Choice is often between two “goods”
“Only a leader of courageous ethical standards can earn the trust of subordinates”

52. 5D. Interventions Establish workplace expectations
Brief common ethical problems
Publicize noteworthy role models
Routinely raise potential ethics issues
Review commitment to ethics annually
Attend to the ethical treatment of others

53. Thank you for attending. You may now go back to your wicked, evil ways.

54. Thank you for your attention. Questions?
Lyndon S. Remias, City Auditor
Office of the City Auditor