What is ethics auditing? 

Ethics auditing is the process of reviewing your organization’s code of ethics, making sure it’s being followed and correcting the situation if it is not.

The goal is to reinforce a strong culture of ethics at your company by not only identifying lapses (should any have occurred) but by reminding everyone to respect and follow the code of ethics.

Keep in mind that employees may not have reviewed the code of ethics since the onboarding process. Ethical audits provide the chance to remind everyone of the code of ethics once again. 

Some of the other benefits and outcomes of ethics auditing include:

• Finding holes in the current code of ethics . If your organization hasn’t updated its code of ethics in a while, it’s possible that new business situations have arisen that carry new ethical concerns. These concerns could be of a social, financial or legal nature. An ethics audit allows you to identify these areas and begin to formulate ways to address them. 
• Assessing the enforcement of the ethics code. An ethics audit will uncover how your company and individual teams enforce and monitor your policies. This can help spot areas where adherence to the ethics code is weak, ignored or even outright violated. 
• Determining bright spots. An audit should not just be about finding problems—it should also be about celebrating successes. Ideally, the process of conducting an ethics audit will uncover ways in which procedures and policies are being met admirably. This gives you a chance to compliment and even reward managers and teams who are doing everything right in adhering to your company’s code of ethics . 

What goes into a code of ethics? 

Before moving on to the finer points of conducting ethical audits, it’s important to understand what a code of ethics is and what it comprises.

A code of ethics documents your company values and how you expect employees to comport themselves professionally. It’s both a mission statement for your company and a practical guide for how employees must behave. If your company doesn’t currently have a code of ethics, here’s a primer with do’s and don’ts for creating your code.

Having a code of ethics in place helps to ensure that your workers behave appropriately around one another and with any outward-facing partners. A code of ethics should establish a culture of acceptance and tolerance at your company. It also serves as a reminder that unethical behavior won’t be permitted, and that if the behavior is egregious, it may even lead to disciplinary action or termination.   

Who conducts an ethics audit? 

An ethics audit is generally conducted by an ethics committee led by an ethics auditor. There’s no exact formula for who should comprise such an ethics committee, but it often includes people from company leadership, human resources and the legal department. In short, anyone who you think would add value to the process can be included in the committee.

The fact-finding and interviewing stage of the ethical audit isn’t conducted by the entire ethics committee; rather, the ethics committee is established to plan and form what will go into the audit and to review the findings. Much of the actual audit is usually performed by an assigned auditor—this can be the head of your HR department, or you can hire someone outside the company to conduct the audit.

How often should you conduct an ethics audit?

You should typically conduct a thorough ethics audit on your organization once every 2–3 years. If a major event takes place at your organization, such as a merger or a restructuring of the company, that may also be a good time to take stock of the code of ethics and assess how it’s being implemented.

In addition to the more formal ethics auditing every few years, you may also want to do random, unannounced spot checks. With a spot check, you monitor a team to ensure that team and all its members are acting in a way that conforms to company ethics policies.

Questions to consider before beginning an ethics audit

There are a number of questions you and the ethics committee might want to answer in order to lay the groundwork for your ethics audit. This preplanning part of the process gives company leadership a chance for sober self-reflection, as well as some goal-setting expectations for the audit.

These questions can be put before the ethics committee in an informal discussion to kick things off or formally answered by the committee and put down in writing for possible inclusion in the final report. 

• What is our company’s system for enforcing the code of ethics ?  
• How are we training employees at our company to be versed in ethical decision-making? Do we provide ethics workshops, and if not, should we?  
• How is corrective action taken when the code of ethics is violated? For instance, is it a one-strike-and-you’re-out rule? 
• Are we ensuring that unethical behavior is treated the same across all levels of the company, even if the unethical behavior is undertaken by company leadership or other higher-ups?    
• What does our company do to show our employees, as well as the wider world, that we are committed to ethical decision-making?  
• Are we regularly reminding our employees of the existence of our code of ethics, such as with an annual notice that each employee must sign to acknowledge that they’re committed to the code of ethics?  
• Should we consider deputizing an ethics ombudsman to deal with internal ethics violations at our company if and when they arise?  

The above questions are by no means exhaustive, but they should serve to get you and the ethics committee thinking about your code of ethics and how you want that code to function within your organization. The questions above, and their answers, may, in fact, raise a related set of questions that you want to address with the committee as you prepare for ethics auditing.  

What are the steps of an ethics audit?

After assembling your ethics committee and considering the questions you want to include, you can begin the process of conducting your ethics audit. Three main steps comprise an ethics audit. 

1. Planning the ethics audit  

Begin by reviewing the current company policies if you haven’t already done this as part of the initial question-answering process. The ethics committee will usually start by looking at the current code of ethics at the company, as well as best practices regarding ethics in your specific industry. 

Your company’s code of ethics and any related ethics policies should be easily accessible to all employees, and these materials are most likely included in the employee handbook. If the code of ethics isn’t in the employee handbook, this part of the process should serve as a reminder to include it in the handbook going forward and to inform all employees of the updated handbook.

In this stage, the ethics committee may also look at past ethical issues and see how they were resolved. This is important knowledge to have to understand how your company has course-corrected and to document in case you discover, through the upcoming audit, that the problem is still occurring. 

2. Conducting the ethics audit

To begin the fact-finding part of the audit, the auditor conducts interviews with supervisors, executives and employees to get a sense of the ethical environment at your organization. Supervisors and employees alike should feel comfortable sharing freely. The auditor should make it clear that the interviewee is to speak honestly and openly. The interviewee should be made aware that the information will be kept confidential.

In addition to the interview process, another good source of information is an anonymous questionnaire. Along with the questionnaire, include your company’s code of ethics and ask everyone to review it before filling out the questionnaire.

The anonymity of filling out a form should lead to openness if anyone is uncomfortable with divulging sensitive information to the auditor. Because the auditor cannot likely talk to every employee directly, these questionnaires can provide a large amount of data to fill in any gaps. 

The questionnaire can just be a few questions, and everyone at the company should be encouraged to return it. It’s good to have a mix of closed- and open-ended questions. Closed-ended questions allow you to plot the data quantitatively, while open-ended questions let the respondent speak freely and expand their thoughts. 

Here are some questions the questionnaire can contain:  

• How would you rate your professional ethics on a scale of 1 to 10 (with 10 being the highest)? 
• How would you rate the ethics of your supervisor on the same scale? 
• How would you rate the ethics of company leadership on the same scale? 
• How could we improve the ethics of our company? 
• Since you began working here, have you seen or participated in anything that you don’t personally believe was ethical or anything that didn’t conform to our code of ethics? 

With the information from the interviews and the questionnaire, patterns may start to emerge. At this point, the auditor begins to synthesize the information, noting any trends or red flags, and prepares to present the findings to the ethics committee with recommended solutions.

3. Reviewing the findings of the ethics audit

The auditor should share the findings with the ethics committee and give members time to review them before the committee convenes for discussion.

As with the interview process in step two, there may be some sensitivity around discussing these issues, especially if there are ethical gaps or failings that alarm company leadership. It’s important for the auditor to focus the ethics committee on improving these ethical issues rather than debating what has already happened. That said, if certain employees or supervisors are breaking the code of ethics, disciplinary actions may need to be taken.

When the ethics committee has come to an agreement about needed changes to the code of ethics as a result of the audit, these changes should be implemented and detailed in the employee handbook. Make employees aware of the changes and send them the updated policy. Considerhaving all employees sign a form stating that they agree to abide by the revised code of ethics. 

Final thoughts

Developing an ethical culture is a process that leadership should reinforce continuously. It’s not enough to conduct an ethics audit, implement changes to the ethics code and then never think about it again. 

Employees know that if leadership isn’t taking the code of ethics seriously, they don’t need to either. In addition to the morality of the matter, lax adherence to the code of ethics could lead to legal and compliance issues. That’s why it’s important to conduct an ethics audit every few years and immediately deal with any breaches of the code of ethics when they arise.