Difference Between Social Responsibility And Ethics

Study questions
Name
Institutional Affiliation
Introduction
The mortgage market is one famous market in the world, due to the high numbers of people looking to invest in it. The industry reaps millions of dollars in profits per year while offering individuals that would otherwise not afford homes to become homeowners. However, the industry’s success experiences numerous challenges such as failure to follow the law, illegal actions and corruption among others as seen in the case of Fannie Mae, leading to massive losses and the suffering of many people.
Q.1 Issues with the external evaluations of companies about governance and ethics
The external evaluations brought out the issue of lack of understanding of governance and ethics. Governance refers to the manner of sharing power and accountability among shareholders, the board of directors, CEO and management, while ethics seeks to establish a particular code of conduct. However, most of the evaluations concentrated on the social responsibility the company had for various groups of people, such as “Best Companies for Minorities” and “Working Mothers,” aspects that do not define either governance or ethics.
Difference between social responsibility and ethics
Ethics is a system of moral values that a company has to follow in achieving its goals by employing the right behavior for the benefit of shareholders, stakeholders, and the community. Social responsibility is the moral responsibility that makes all individuals accountable for bringing about benefits for the society.
The relationship between practices of good governance and ethics
There is a connection involving ethics and good governance practices. Good governance practices involve the combination of different mechanisms designed to guide and steer an organization towards the best interests of its stakeholders and the society. Ethics, which is the moral principle that determine the conduct of an organization, is also an aspect of corporate governance that outlines the ethical standards of behavior in running an organization.
Q.2 The signals missed in Fannie Mae’s devolution, were they missed or ignored?
* Keeping off the books Fannie Mae’s gains and losses as hedges without considering whether the accounting rules allowed for it.
* Lack of input by the company’s controller in developing amortization strategies.
* Having one officer determine the targets and how to meet them
* Having the departments of Ethics and Compliance, and Litigation Division headed by one individual.
The Company deliberately ignored the signals as its primary aim was reaching its improbable targets at the expense of following the right procedures.
Evaluation of Mr. Barnes and the company’s response to him.
Mr. Barnes sought to raise issues on the presence of errors in the accounting policy, failure by the audits to conduct investigations effectively and the false adjustment made to enable the company to meet its targets. The company responded by crippling the inquiry by failing to furnish the auditing department wit...