The role of ethics and compliance in a business can be described as the link between the business environment and the three levels of the organization or business. These levels are the macro level, which is the national or global context of the business, the institutional level that entails the ethics that characterize a company, and the individual level ie. personal ethics in an organization. In the modern business environment, every company, organization, and corporation is required to carry out its operations and activities in an ethical manner and with complete honesty. The integrity of businesses and corporation that advocate for ethics and honesty is demonstrated by ethics and compliance with regulations. The need for corporations and businesses to conduct their activities in an ethical manner originates from the fact that ethics is regarded as the backbone of a business to maintain a secure financial environment. As a result, organizations need to prioritize and comply with these regulations in daily operations.
Role of Ethics and Compliance in Wal-Mart's Financial Environment:
Similar to other major corporations across the globe, ethics and compliance plays an integral role in promoting and sustaining the continued success of Wal-Mart stores. Actually, the corporation believes that the highest level of ethics and communication is needed in order to guarantee success. As a result, Wal-Mart has an open door policy for associates that need to discuss issues that pertain to ethics with the management. Based on the open door policy, Wal-Mart's management are required to tackle any issues related to ethics in a timely manner. Wal-Mart has also established a Statement of Ethics that clearly shows the expectations for operating in an ethical manner. In addition to requiring all workers to be familiar with this statement, Wal-Mart also requires the employees to adhere to the statement. Furthermore, the company also has an ethics helpline for associates to use in presenting complaints while remaining anonymous.
In order to ensure compliance, Wal-Mart requires all its financial books, accounts, and records to accurately mirror financial events and transactions. These financial records must comply with the Generally Accepted Accounting Principles and the company's internal controls systems. As a result, no financial document or record of the organization may be inaccurate or falsified for any reason. The comprehensive outline of responsibilities for ethics and compliance has played a crucial role in the firm's financial environment. In addition to outlining these responsibilities, adhering to the law with regards to financial records and disclosures has enabled Wal-Mart to differentiate itself from competitors. Through this, the firm provides a sense of clarity and high level of ethics that motivates behaviors and actions that upholds the law.
Wal-Mart's Procedures for Ensuring Ethical Behavior:
Wal-Mart and its leadership are basically guided by three basic beliefs that act as the foundation for ethical behavior in the organization. These three beliefs are respect for individual, service to its customers, and striving for excellence. Throughout the years, Wal-Mart has adopted various procedures that promote and help to ensure ethical behavior in all its operations and practices. However, as an organization that hires millions of workers across the globe, the task of ensuring ethical behavior is extremely challenging and difficult. Some of the most significant procedures adopted by the firm to ensure ethical behavior include & #8230;
Statement of Ethics:
As previously mentioned, Wal-Mart has established a Statement of Ethics, which is a 36-page document that is presented to all its workers upon hiring. This Code of Ethics contains comprehensive information of the regulations, policies, and principles that are compulsory for all its employees to obey based on the three core values. The company also developed a code of ethics exclusive for the Chief Executive Officer and the entire senior management team as part of ensuring ethical behavior in the organization from a top-down approach.
Global Ethics Office:
The second major way with which Wal-Mart ensures ethical behavior across all its operations is through the establishment of Global Ethics Office, which is a department that helps in approving the value of ethics to the company's international stakeholders. This department has a confidential and open door policy for its stakeholders to present their ethical concerns. In addition to being responsible for the adoption and maintenance of the firm's statement of ethics, the Global Ethics Office supervises any inquiries originating from any ethical concern.
Ethical Standards Program:
The other procedure for Wal-Mart to ensure ethical behavior across its national and global operations is through the establishment of an Ethical Standards Program that is mandated with the task of promoting positive working environments for all laborers the firm's does business with. Since Wal-Mart is a huge organization that deals with various manufacturers and purchases of their materials from various supplying organizations worldwide, the Ethical Standards Program deals with ethics related to the company's suppliers. The program has actually developed a statement of ethics for suppliers to exhibit huge concern and broad initiatives for ethical behavior.
How Financial Markets Work in the United States:
The financial markets in the United States comprises of various separate markets for different products offered on a series of trading platforms and exchanges. Some of the many products traded in the U.S. financial markets include equities, derivatives, foreign exchange, and fixed-income securities. The United States financial markets basically carry out the function of directing funds from agents with savings to lend to agents who want to borrow and need funds. Kern & Speyer (2010) state that the American financial market will remain an increasingly competitive place with strong financial centers since its governed by complex system of supervision and a series of market regulations of unexpected complexity.
The United States financial markets basically bring together buyers and sellers to buy and sell their stocks through a stock exchange where the trading of stocks takes place. Some of the widely recognized stock exchanges in the American financial markets include the American Stock Exchange and the New York Stock Exchange. The sale of these stocks may involve the use of a brokerage firm, which is a dealer of stocks and other securities who act as agents during the process of buying and selling of stocks.
While the American Stock Exchange and the New York Stock Exchange are regarded as the two national exchanges, there are other smaller stock exchanges in various regions like Chicago, Boston, Los Angeles, and Philadelphia. The regional stock exchanges are established to accelerate the speed of trade and make it cheaper for investors. In the United States financial system, there are primary and secondary markets with the primary markets described as markets where newly-issued securities are sold to the initial buyers by the government or corporation borrowing the funds. On the contrary, the secondary markets are financial markets where previously-issued securities are either sold or bought. The primary markets are mainly dominated by investment banks, which are involved in underwriting securities whereas brokers and dealers are the main features of secondary markets to facilitate transactions.
Wal-Mart's Compliance with SEC Regulations:
As a well-established and successful corporation, Wal-Mart has a workforce of 2.1 million employees across its global associates with nearly 1.4 million employees being in the United States. Since Wal-Mart operates hundreds of stores throughout the world, there is a huge need for it to ensure proper procedures in order to adhere to SEC regulations.
The main goal of the United States Securities and Exchange Commission is to protect investors through maintaining orderly, fair, and efficient markets and facilitating capital formation. In order to achieve this mission, SEC requires public companies and corporations to disclose important financial information and other meaningful financial information to the public. This enables investor to have a common source of knowledge to use in making decisions about buying, selling, or holding a certain security.
Wal-Mart not only files an annual financial report to the SEC but it continually provides a comprehensive annual report to the commission as required by the law through disclosing necessary and accurate information. They submit the report using a form 10k that includes financial statements, reports, announcements, and information depending on reasonable assumptions that are relevant to the business.
As part of complying with SEC regulations, Wal-Mart uses various processes in financial reporting and disclosure. First, the company has established an audit committee with four independent directors who are not part of the organization. The company's management basically relates to internal functions and financial reporting of consolidated financial statements. On the contrary, the audit committee appoints independent auditor for the firm in addition to supervising and evaluating the auditing processes. As part of ensuring that this committee complies with SEC regulations, Wal-Mart conducts regular meetings with the Audit Committee. Secondly, Wal-Mart has developed an executive compensation committee with the responsibility to review and approve the compensation of its top management such as its president.
Wal-Mart's Financial Performance:
In order to determine the firm's current ratio, we need to divide the current assets by the liabilities for the same year. The firm's 2010 current ratio…