Mitigation-Ethical and Legal Issues

A business should operate within the legal and ethical framework provided by the government and other policymakers. The ethical practice should also include activities in the finance department such as financial reporting and management earnings by the business (Beaudoin et. al, 2014). It is the responsibility of a CEO or CFO to ensure that the guidelines that regulate operations are adhered to avoid conflicts with regulatory bodies. The aim of this paper is to explain how a CEO of a publicly traded manufacturing firm can mitigate the potential for serious corporate damage due to legal and ethical issues. It also identifies the kind of process that can be built within the business to avoid legal or ethical issues.

The CEO has the responsibility of ensuring that the risks that may lead to ethical and legal issues are addressed. One of the ways of mitigating such risks is by understanding the ethical behavior as provided for in the code of ethics and conduct of the firm and regulatory bodies. By understanding the legal and ethical requirements, a CEO can effectively enforce the laws and regulations through other managers down to the rest of the staff. The CEO should also ensure that employees are made aware of what is expected of them to ensure that they operate within the ethical and legal provisions or boundaries (Peterson, 2013).  For example, assessment should be carried out to determine the relationship between earnings management and behavior of accountants (Beaudoin et. al, 2014). Awareness among the rest of the staff can be done through educational forums organized by the ethical and legal managers. 

An organization can also build processes in the operations, policy, culture and procedures to ensure that it does not experience ethical or legal issues. One of the effective processes that is recommended for CEOs is establishing and implementing a strict compliance program that controls all operations in the firm (Kwamina & Small, 2013). The program is effective in identifying and preventing misconducts thus encouraging adherence to ethical and legal obligations. The firm must also give a clear outline of procedures and policies that guide employees on what they can do and avoid. These regulations are related to interests, political factors, corruption and accounting practices.