Effectiveness of Auditing in Corporate Business

Effectiveness of Auditing in Corporate Business UK Auditing Introduction The UK auditing and accounting market is one of the largest in the world with over 432 accountants per hundred thousand of population (Saudagaran, 2003, p.10), many of whom are employed in auditing firms. This paper will concentrate upon one aspect of the accountants role in corporate business, namely that of auditors. The author’s intention is to discuss and evaluate various aspects of the auditing market and duties with a view to reaching a conclusion regarding the effectiveness and efficiency of their role in the commercial market. Audit Market Over the past few decades the United Kingdom audit market has seen a significant level of consolidation from a previous position of eight competitors. The industry nationally, now worth in excess of  £2.4 billion per annum, is presently dominated by four firms, which are Price Waterhouse Cooper, Ernst and Young, KMPG and Deloitte Touchà ©. Between them, these firms prepare the audits for over ninety percent of UK listed companies, including all but ten of the FTSE[1] corporations. Below this level, there is a secondary tier of between nine and fifteen auditing firms. The big four dominance of the auditing marketplace presents serious problems for other firms who wish to enter the market. Primarily there would be the difficulty of cost together with the return on their investment into such a move. For example the largest auditing firm outside of the â€Å"big four,† has a revenue level, which is less than half that of the smallest big four firm, Ernst and Young. Add to this the economical factors of entrance and risk involved with competing against the dominance of the big four and it is not difficult to understand the reluctance of other firms to challenge the present positions (Discussion Paper, 2006). In addition to the challenges new firms would face from present organisations, they would also be faced with having to address the current perceptions of the firms needing auditors. The situation is that most of the FTSE corporations perceive that, outside of the â€Å"big four,† other firms would not have the experience, resources or ability to manage their auditing requirements. In addition, concerns regarding quality would also be one of the major problems that would need to be addressed. From the viewpoint of the regulators and the clients, there are concerns with regard to the low numbers of auditing practices that exist at the top end of the markets. Not only is there fear that further consolidation will reduce choice even further, but many corporate audit committee chairman believe that the present structure itself allows for insufficient choice. This is particularly true considering the fact that auditing firms cannot offer any other services to their clients, such as consultancy. The other area of the contraction of the audit market that causes worry to corporate managers and shareholders is the high increase in audit fees that has been seen during recent years as increasing corporate governance demands are implemented. Despite the concerns regarding auditor choice, in the main confidence in financial statements in the UK remains at a very high level with investors. In a conducted survey in 2004 (Virdi, 2004) over 86% of fund managers, one of the main sources of corporate funding and investment were satisfied with the standard of financial statements, and over 87% had a fair to great deal of confidence in the auditing process. The Audit Inspection Unit (Public Report, 2006) also seemed to be relatively satisfied with the present quality levels of audits being carried out. In general, whilst there is a reasonable level of satisfaction with current audit levels, the concerns regarding choice of auditors and the inherent problems of further consolidation within the industry will need to be addressed. In particular, there is a need to avoid the â€Å"big† firms achieving a monopolistic status. Audit Regulations Before 1980 and the Companies Act 1985, corporate auditors were required to be members of the four recognised accounting institutes of the UK. At that time, the industry operated on a self-regulatory basis, monitoring its own members (Gray and Manson, 2004, ch.4). This position was not seen as satisfactory as the potential for conflict of interest existed. In an attempt to address the conflict problem the European Union (EU) issued new rules, embodied in its 8th directive, which required governments to closely monitor auditors. Subsequent to the 8th directive from the EU and the Companies Act 1985, auditors needed to obtain licences to practice from a Recognised Supervisory Body (RSB). In the early 1990’s the government also set up the Financial Reporting Council (FRC) in a move to improve auditing reporting standards. However, as the main accounting institute’s applications to become RSB’s were accepted, ultimate control and inspection of auditors still at that time remained in the hands of the professions. Therefore, although the RSB have the power to withdraw or suspend licences, ultimately the decision still rested with the institutes. Whilst in some areas this was considered an appropriate way to address industry regulation, many felt that it still did not address the issue of conflict of interest. Because of this continuing disquiet, in the late 1990’s an independent body known as the Accounting Foundation was set up to take over some of the RSB’s responsibilities, specifically those of auditing practices. It was the problems associated with the Enron disaster (Matt Krantz, 2001), which prompted the most significant change in the UK auditing regulatory hierarchy. Resulting from this situation, much of the monitoring and regulation of auditors was transferred to the FRC[2], which was generally well respected and considered to have the independence that satisfy financial institutions and corporate shareholder concerns. This included the Auditing Practices Board. The FRC is also responsible for ethical guidance and auditing standard guidelines. Several bodies have been set up by the FRC to oversee, monitor and investigate all areas of the auditing profession. These include the Professional Oversight Board and Audit Inspection Unit, which have taken over responsibility for monitoring the RSB’s from the DTI. These units oversee and investigate audit firm actions and decision made throughout the audit process. The Accountancy Investigation and Discipline Board are also under the responsibility of the FRC. Whilst this unit can investigate cases referred from the RSB’s and the accounting institutes, it also has the power to launch independent investigations where the need arises. Therefore, whilst the RSB’s still control large areas of the auditing structure, such as inspection and investigation, their actions are accountable to the FRC. Although responsibility for monitoring, standards and investigation routines have moved away from the institutes, there are still those who are uncomfortable with the level of government involvement in the auditing industry, and these call for more state control. There is some merit in this view, particularly in view of the dominance of the â€Å"big four† members on the institute committees. A recent KMPG report (Copnell 2006), confirms that shareholders are seeking much more transparency regarding issues such as qualification, suitability and compliance of the external auditors. Ethics and Auditing One of the issues that have received most attention with regard to auditing is that of ethics (Gray and Manson, 2004). The behaviour and veracity of auditors has come under scrutiny over the last two decades. The objectivity and freedom from influence of auditors has become a major issue of shareholder concern globally, as University of Aukland (Cheung and Hay 2004) research confirms, and the UK is not an exception. Confidentiality, promotion and new appointment procedures are other areas where auditors and expected to act in an ethical manner. Historically, the difficulty was that there were no guidelines, monitoring or investigation procedures relating to ethical issues. Before 1989, the institutes own guides on ethical matters were seen to be inadequate. Post 1989, the RSB system made ethical compliance a regulatory part of the institute’s monitoring processes. However, this did not alter the control or investigative procedures for ethics. Following government reviews in the early years of the new millennium, and the transfer of the APB and to the FRC, responsibility on major ethical issues, such as integrity, objectivity and independence became more independent, although other ethical issues remained the province of the institutes. In addition, major investigation and complaint cases, particularly those considered to be of â€Å"public interest,† became the responsibility of the newly created Investigation and Discipline Board. To further address the ethical issues, the ASB produced guidelines (2004). These included five major statements and one for small entities. The first of these statements outlines the compliance requirements and the identification of threats to the ethics of audits that may exist. It further outlines the safeguards that should be implemented by audit firms to avoid such threats, including the review of the audit by an independent partner in the firm and the compliance with corporate governance rules and regulations. The second ethical statement deals with the relationship between the auditors and their clients. Within this statement, the ASB covers such items as financial relationship between the parties as well as issues that might arise from personal relationships, for example family connections or the employment on audit by the auditing firms of an employee of the client being audited. Whilst this statement allows auditors to employ experts for opinion purposes during the audit, it does stress that such experts must be independent. Therefore, this precludes an auditing firm from using the consultancy arm of its own firm. Statement three deals with the length of association with an audit. Whilst it does not call for regular changes in the audit firm itself, this statement does make provision for the terms of service of audit team partners and members who are conducting the audit, such terms being stated not to exceed five or seven years depending upon the position of the team member. The fourth statement concentrates upon fees, litigation, gifts and hospitality. With regard to fees, the statement stresses that these should be time and skill based and not determined by any other factor. Similarly, it dictates that the level of fees should not affect the intention to allocate adequate resources to the audit work. The statement further states that audit firms should not accept appointment in any cases where their firm, whether it is the auditing department or not, is involved in litigation with the client. Finally, the acceptance of gifts and hospitality is declared unacceptable unless â€Å"its value i s insignificant.† The fifth and final ethical statement deals with the issue of the provision of non-audit services to an audit client. It addresses how these pose a threat to the audit and what measures are needed to safeguard the audit firm from the perception that such a threat my have on their independence as viewed by others. Following on from the Enron disaster, where it was considered that the auditors had lost independence and integrity, there was an international effort to restore public confidence in the auditing industry by introducing a range of regulations and rules. In the US, the Sarbanes-Oxley Act (2002)[3] was introduced, which aggressively restricted auditors from providing other services to clients and made rotation of key staff mandatory. In the UK, the Combined Code[4] was used for similar purposes, incorporating many of the aspects and demands of the Ethical Statements. In the UK, whilst the government has set up independent regulatory bodies such as the FRC to deal with a range of ethical issues, including setting standards, monitoring and investigation into compliance, there is still little statutory requirement. Although the institutes themselves may feel that the ethical structure is too extensive and stringent, there are those who hold the opposite view. However, it is apparent that ethics and integrity are of major importance when it comes to protecting the business stakeholders, including shareholders and creditors. Incidences such as Enron have clearly shown that to leave the monitoring of such areas solely within the control of the profession does not provide the degree of protection required by other stakeholders and that this can only be achieved by independent external bodies. Legal Actions against Auditors Litigation against UK auditors is a complex area. In essence, any proposed litigation will be dealt with under civil law, in particular the law of contract, where there is breach of a contract between the auditor and the client, or tort law, where there is a claim for negligence made by a third party, such as banks and shareholders (Gray and Manson, 2004). The outcome of most disputes of this nature is normally based upon previous case law. The most prevalent cases against auditors tend to occur following client insolvencies, after takeovers and mergers and in incidences of fraud. From the plaintiff’s (claimants) aspect and for their case to succeed, they have to prove that it was reasonable to expect that the auditor owed them a duty of care and that, as a result of sub-standard work or negligence on the part of the auditor, they have suffered a loss. In terms of auditors, perhaps the most defining case in terms of the above issues is that of Caparo case[5]. In this case, the auditors had given an unqualified certificate to a corporation, which the plaintiff relied upon when making a takeover. It was subsequently revealed that the profits had been overstated. Thus, the plaintiff sued for breach of contract and negligence in tort. In settling the case is was adjudged that in the matter of contract the auditor’s responsibility, as defined in the Companies Act, was to the company as a separate entity, not individual shareholders. With regard to the question of negligence it was held that the condition of â€Å"proximity,† or relationship between the auditor and Caparo, a core issue when deciding whether negligence has occurred, was not sufficient. It was stated that the auditor could not have reasonably expected the plaintiff to have relied upon their statements for actions they took, and therefore could not be held to be negligent. This approach and definition has been held in most subsequent cases. However, in 2002, a case between Royal Bank of Scotland and Bannerman Johnson Maclay appeared to change the position in Scottish Law (Glyn Barber 2002), although this does not apply to the English courts. Here the auditors were found guilty of negligence to a third party. To address the potential for claims, one of the conditions imposed by the RSB was that auditors must have professional indemnity insurance. Whilst most insurance companies sought to settle potential claims out of court, it did lead to continual premium increases. This, joined with the fact that the structure of auditing firms meant individual partners faced the prospect of losing all personal assets, led to increasing concern in the industry. To address these, and mitigate the fear they might lead to further industry consolidation, the Companies Act 1989 allowed audit firms to become limited liability companies. Auditor protection was further enhanced in the Companies Act 2006[6], by allowing them to reach agreement with shareholders to cap their contractual liability. From the foregoing it is obvious that not only is it extremely difficult to succeed in a liability case against an auditing firm, but that the industry generally has been very effectual in creating greater levels of protection for their firms and individual employees in recent decades, although as a recent article (Lawsuits threaten US audit firms, 2006), shows, the threat has not been totally eliminated. However, other stakeholders are not satisfied with this position but it seems that, unless direct fraud or illegal acts can be proven, there is little chance of challenging audit firms providing their audits have been performed within the confines of the regulations and rules that have been imposed upon them by their institutes and the independent monitoring bodies, such as those within the Financial Reporting Council. Conclusion Over the past three decades or so, it can be seen that there have been substantial changes made within the auditing industry. Whilst there has been improvement, both regulatory and statutory, in the conduct and standards of audit work, there are still areas that need to be further examined. Firstly, although the consensus is that standards are satisfactory, concerns over independence and transparency of reporting remain. Secondly, the concentration of major corporate audits into the â€Å"big four† firms does raise issues. These include the fear of consolidation, lack of competitive fees and difficulties in changing audit firms, as well as the problem of choosing firms for non-audit financial, accountancy and consulting work. Lastly, the issue of litigation and the audit firm’s ability to create protection against such action has caused some distrust. A possible solution to some of these issues couple is to ensure that any further mergers are referred to the monopolies commission and, from an independence viewpoint, to look at the feasibility of de-merging the auditing arms of the firms from their other services. References ASB Ethical Guidance (2004). Retrieved 5 January 2007 from http://www.frc.org.uk/apb/publications/ethical.cfm Barber, Glyn (2002). Can you still bank on an Audit. Accountancy Age, UK. Cheung, Jeff and Hay, David. (2004) Auditor Independence: The Voice of Shareholders. Business Review. Volume 6, issue 2. University of Aukland. Copnell, Timothy (Director) (2006). Shareholders’ Questions 2006. Audit Committee Institute KPMG LLP. UK. Discussion Paper (2006). Choice in the UK Audit Market. Financial Reporting Council. Retrieved 6 January 2007 from http://www.frc.org.uk/images/uploaded/documents/Choice%20in%20the%20UK%20Audit%20Market%20Discussion%20Paper4.pdf Gray, Iain and Manson, Stuart (2004). The Audit Process: Principles, Practice and Cases. Third edition. Thomson Learning. Krantz, Matt (2001). Accounting rule for energy companies eyed. USA Today. 3 December 2001. Lawsuit threaten US audit firms (2006). Accountancy Age. 18 September 2006. Public Report (2006). 2005/6 Audit Quality Inspections. Audit Inspection Unit. Retrieved 6 January 2006 from http://www.frc.org.uk/images/uploaded/documents/Choice%20in%20the%20UK%20Audit%20Market%20Discussion%20Paper4.pdf. Saudagaran, Shahrokh M (2003). International Accounting: A User’s Perspective. 2 Rev. Ed. South Western College Publishing. UK Virdi, Alpha A (2004). Investor Confidence Survey 2004. The Institute of Chartered Accountants in England and Wales. Retrieved 7 January 2006 from http://www.icaew.co.uk/index.cfm?route=116714 1 Footnotes [1] Financial Times Stock Exchange [2] Financial Reporting Council [3] Available from http://www.sec.gov/about/laws/soa2002.pdf [4] Available from http://www.frc.org.uk/documents/pagemanager/frc/Web Optimised Combined Code 3rd proof.pdf [5] Caparo Industries plc v Dickman [1990] 2 AC 605, 618 [6] See Companies Act 2006, section 535

Political Philosophy and the US Constitution: Influences of Locke and Mill Essay

The US Constitution offers an arrangement of the American governmental system. Interestingly, it was influenced by political philosophers whose works too had inspired people across the globe especially on the values of democracy. This essay is devoted on providing an account of how two men inspired the framers of our constitution namely, John Locke and John Stuart Mill. John Locke was one of the great political philosophers who would defend the existence of a government in our society. It is quite interesting how intellectuals like him begin the journey toward a parsimonious theory by looking deeply into the state of nature. Locke’s state of nature is one where humans have freedom. His was an optimistic view of how men, being equal amongst them establish order in the law of nature which is governed by reason. This reason guides men to avoid doing harm on anyone else’s liberty, health, life and possessions. Yet, men give up their state of nature to preserve their lives, liberties and estates or what he called- property. Read more: Constitution mini q answers essay Property is created by labor. The human effort mixed with natural resources is the criterion that justifies private property. Man’s desire to avoid the disadvantages of the state of nature given the scarcity of resources threatening life and freedom or his â€Å"state of war† is the root of man’s will to form a society and eventually a government, which is established not by a contract but by fiduciary trust. People consent to a political power for three reasons: the establishment of law, an impartial judge for law enforcement, and a penalty to punish law violators. Men formed government in order to preserve these liberties, lives and properties and since they are born with them then no government can take that away from them. Man has inalienable rights and liberty that must be protected- anyone who transgresses the law of nature and whose act causes injury upon others will ought to be penalized. He considers the legislature the highest body of government since it is the one hat preserves the society and creates the laws. According to Locke, the people become trustor and beneficiary while the legislature is the trustee. The legislature holds the supreme power according to Locke upon which the executive must be subordinate, yet the people remain above all organs of the government. These ideas were contained in his â€Å"Second Treatise of Government†, which were likewise adopted in the US Constitution. Locke argued that people has the sovereignty not the rulers. In the Declaration of Independence it was stated that, â€Å"governments derive their just powers from the consent of the governed. † This is an illustration of how Locke influenced the US Constitution by ensuring that the rulers are accountable to the people. The legislature assures that the law must apply to all; they must not be arbitrary and not oppressive; they must not raise taxes without people’s consent and; must not transfer its law-making body to anyone else. A presidential democratic system of government was preferred since Locke himself did not believe in the divine supremacy of a monarchy. The government does not have rights, only the people have. Locke asserts that the people have supreme power to remove or alter the legislative when they find a legislative act contrary to the trust reposed in them. Since property precedes government, and considering that it is the end to which men unite into a political society, the state then cannot take away any of his property without his consent. This is manifested in the Fourteenth Amendment to the constitution of the United States saying that, â€Å"no state shall deprive any person of life, liberty or property, without due process. † The Constitution itself that was chartered by the majority is higher than the rulers. The Supremacy Clause of Article VI establishes the â€Å"rule of law,† which supports the idea that the government itself, with the Congress and the Executive, must abide by the law. Locke too conceptualized on the â€Å"separation of powers† and governmental â€Å"checks and balances†. Locke believed that the importance of rationality as a human faculty, could overrule the interests of the public good if left unchecked in the legislature. He was also pessimistic of the concentration of powers in only one body of government as it could lead to tyranny and abuses. Locke’s theories of disobedience also shed light to the right of individuals to political association and political opinion. Accordingly, revolution is not only a right but also an obligation. It must be noted that people’s obedience to the government is due to the latter’s protection of their values. When government encounters dissolution from within- for instance when the president overrides the laws and defeats the legislature, the people are at liberty to erect a new government by changing persons, form of government or both. Failure of the state to provide or sustain that protection would result to people’s replacement of the government. There are three types of commonwealth according to Locke-democracy, monarchy, or oligarchy. Treating the Commonwealth as not necessarily a democracy for any type can be considered one if it promotes the public good, people always have the power to change government type determined by the holder of legislative power. Yet rebellion however is justified in the instances where the people are made miserable, could be avoided if free communication channels are maintained; besides revolution doesn’t occur in little mismanagement of the public affairs. There are better ways as initialized by the Constitution on how to formally replace ineffective leaders that is through impeachment and through peaceful elections. Hence, the overall contribution of John Locke to the US Constitution are the following; limited government, inalienable individual rights, and inviolability of property. The First Amendment of the US Constitution protects freedom of speech and expression. This is probably John Stuart Mill’s greatest contribution in political philosophy with application to US politics. Mill focused on how the practice of one’s absolute freedom like freedom of opinion and sentiment, which is an essential component of liberty, should prevail, as it is critical to the determination of truth and justice. According to him, unless absolute freedom of opinion and sentiment- scientific, moral and theological- is guaranteed, a society is not completely free. Mill guards against a tyranny of opinion and feeling. He guards against the tyranny of the majority, which is a result of ethical norms proposed by society. Hence, he referred to eccentricity as a character when and where strength has abounded, perhaps as a result of courage to pronounce one’s belief albeit there is already one that is generally accepted. Democracy should arise from a condition where majority has been able to show genius, courage and vigor-which are personalities of eccentrics. Mill calls for individualism and creativity. Mill explains his defense of expression of opinion using a utilitarian perspective- that maximization of one’s freedom is for the benefit of the society as it breeds human progress due to competition of ideas. First, Mill states that the â€Å"opinion which we silence may be true and in silencing it we assume our own infallibility; though the silenced opinion may be erroneous on the whole, it may be partly true, and because the prevailing opinion on any matter is rarely the complete truth, it is only by the collision of adverse opinions that the remainder of truth has any chance of being supplied; even if the prevailing opinion be the complete truth, it will inevitably become dogma, prejudice and formula unless it is exposed to the challenge of free discussion† (Ebenstein, 2000). Mill opposes majority rule, as it appears to him a domination of a specific class. He prefers representative government as it brings about representation of the minorities. This suggestion was adopted in the US Constitution specifically on the election of presidents and vice-presidents by Electoral College and by creating a legislature consisting of district representatives. Locke and Mill’s insights are useful in our political environments up to this date. They have enabled democracy to flourish in America by insisting on their liberal traditions. In international relations, their principles are similarly utilized in the promotion of rights and freedom as well as the protection of every state’s territory and the designation of international institutions, which are tasked to protect nations from abuses and external threats. References: Amar, Akhil Reed. America’s Constitution – A Biography. New York, NY: Random House, 2005. Ebenstein, William and Alan Ebenstein. Great Political Thinkers: Plato to Present. 6th Edition. Thomson Wadsworth. 2000. â€Å"John Locke†. Democracy and the Origins of Constitution. In http://www. sullivan- county. com/bush/constitution. htm Shields, Currin. â€Å"The Political Thought of John Stuart Mill. † In http://www. ditext. com/mill/rg/shields. html

Apollo 13 Communication Plan

A Self Reflection: While working on the communication project, we were fortunate to have had Ron Howard’s â€Å"Apollo 13† movie for reference to comprehend the complexity the team faced upon the incident that befell the mission. Both Gene Kranz (Lead Flight Director and Project Manager) and Jim Lovell (Apollo’s commander) maintained absolute control of a chaotic situation. While the team was becoming intractable, Kranz reigned in by channeling the ideas with â€Å"one at a time people† and asking his engineers to â€Å"quiet down, Let's stay cool, let's work the problem† successfully taming an already chaotic situation through effective communications. In this dire situation, the only possible way to get the astronauts home was through extraordinary teamwork and ingenuity, led by Kranz, who was adamant that â€Å"Failure is not an option. † It was an unprecedented display of resolve, inventiveness and above all an exhibition of the utmost emotional intelligence there is. Awed by the interpersonal skills and assertiveness of Gene Kranz, I reflected back on my own life experiences where I could have been on more solid footings had I been able to control my emotions and use them wisely for a better outcome. This assignment really served as a virtual lab where I repeatedly found myself asking what if it were me in their stead? What would I do? How would I behave? What would I say? And above all would I have what it takes to bring the astronauts back home? This exercise asserted that the need to clearly define roles, responsibilities and objectives, and to communicate them to the stakeholders is paramount. We are, each of us, part of the system. We all serve an equally important role, and objectives cannot be achieved without the contribution of all. Aucoin states in chapter nine â€Å"the projects are all â€Å"right-brain† projects†¦Ã¢â‚¬  One can appreciate the value of this sentence after working the communication exercise, as the inspiration it conveyed was truly boundless. Indeed I will put forward and utilize the right-brain capabilities in my own projects moving forward. Applying those right-brain concepts to the information technology sphere of work would definitely put a positive spin on projects as we often manipulate ideas, concepts, and models before committing to the implementation. We frequently fail because we focus on technology ignoring the communication and collaboration piece and rarely utilize the right-brain concepts that can help us align our technology with the common goal.

Ethical and Social Issues in Information Systems

Chapter 4 Ethical and Social Issues in Information Systems LEARNING OBJECTIVES After reading this chapter, you will be able to: 1. Analyze the relationships among ethical, social, and political issues that are raised by information systems. 2. Identify the main moral dimensions of an information society and specific principles for conduct that can be used to guide ethical decisions. 3. Evaluate the impact of contemporary information systems and the Internet on the protection of individual privacy and intellectual property. 4. Assess how information systems have affected everyday life. CHAPTER OUTLINE 4.1 UNDERSTANDING ETHICAL AND SOCIAL ISSUES RELATED TO SYSTEMS A Model for Thinking About Ethical, Social, and Political Issues†¦show more content†¦public school buses. However, she also worries about the location tracking data being misused. â€Å"I don’t want anybody watching them that’s not supposed to be watching them,† she notes. Others feel the same way. Location tracking has benefits, but it also opens the door to potential invasion of privacy. Many people may not like having their physical move125 126 Part One Organizations, Management, and the Networked Enterprise ments tracked so closely. Location information might help direct a tow truck to a broken-down car, but it could also be used to find out where the driver went during the lunch hour. For similar reasons, privacy advocacy groups have opposed the use of radio-frequency identification (RFID) tags in consumer items. RFID tags are small silicon chips equipped with tiny antennas that enable them to communicate with RFID readers and track the location of items as they move. When placed on individual products, they allow companies to tell exactly when a product leaves a store or learn more about the actions of consumers buying the products. Designer Lauren Scott had planned to add radio frequency tags to the childrens’ clothing she designed to help parents keep track of their children. An RFID tag sewn into a child’s clothing could store vital medical information or track the wearer’s location to prevent children from beingShow MoreRelatedEthics : Ethical And Ethical Valu es1591 Words   |  7 Pages1. What is ethics? How are ethical values formed? Can ethics be taught or changed? Explain why ethics are important to MIS. How do ethics relate to laws and to codes of conduct? What are Kohlberg’s Six Stages of Moral Development and how does that relate to ethics in MIS? Ethics is defined as the branch of philosophy that involves organizing, defending and endorsing the concepts of right and wrong behavior. 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