Differences Between Code of Ethics and Code of Conduct | IAS TARGET IAS Target

Code of Conduct and Code of Ethics

A code of conduct refers to rules that define the social standards, rules & responsibilities of, or proper implementation for, an individual, party, or organization. It is defined "Code of Conduct" as "principles, values, standards, or rules of behavior that pilot the decisions, procedures, & systems of an institution in a fashion that:
  • It helps in the welfare of its key participants.
  • It Respects the rights of all constituents affected by its operations.
It is confirmed in many reports that a Code of Conduct (CoC) refers to the documents which enlist rules & policies that govern the business and ethical conduct of directors, committee members, and staff. The sphere of a Code of Conduct includes the respective legal duties of each director, committee member, & staff member and identifying unlawful or prohibited conduct.

Constituent of a Code of Conduct

A Code of Conduct must address all-important ethical issues, moral issues, and legal duties with respect to the behavior & conduct of individual directors, volunteers, and staff members of the credit union. It should deal with the following issues:
  • General standard of care of directors and officers
     The extensive duty of care required of directors, officers, and committee members entails that "all officer bearer of a committee from top post to the lower-rung employee, established under this act (or legislation) shall exercise the powers and discharge the duties of his/ her office honestly, in good faith & in the best interests of the institution." The standard to which this duty is to be held, is mention in section 144(2) of the Act". The person holding a senior position in an organization/institution must have various responsibilities:
    • Person should Fully understand the scope of the law and assigned authority & do not cross its limitation.
    • He/She should keep informed of changes to DICO by-laws & provincial legislation & object immediately to incidents of infringement.
    • Person should ensure that each action performed is in the best interest of the institution and not for personal gain.
    • Person should co-operate fully with FSCO & DICO in responding to their concerns, particularly on matters of statutory observance and organizational risk.
    • Person should keep abreast of legal actions taken against the institution.
    • Ensure contentious decisions involving conflict of interest are meticulously documented.
    • Person should review on-site verification reports, league reports, & external auditors' reports to identify. A person must take steps to correct the operational deficiency.
    • Person must ensure that officers/employees are bound under an agreement and may be trustworthy for the time being.
    • Ensure that adequate access to material & resources is available to administration and the board so that sound business & financial settlements can be made
    • To develop a common organizational view prior to making a public comment regarding controversial issues that concern the institution.
    • To obtain director's liability insurance.
    • Ensure that all significant policy affairs have been approved by the board & implemented by management in compliance with DICO By-law No. 5 & the applicable Act.
  • Compliance with all applicable laws
  • Directors, committee members, officers, and employees must comply with the Act and Regulation. Non-compliance with the Act can carry severe consequences for directors and officers, primarily where it signifies an offense. The institution, and its directors, committee members, and officers, have responsibilities and duties under other Acts and the common law.
  • Confidentiality
  • Rules of confidentiality must be extended to every director, committee member, and officer of an institution. Under these rules, every member should assume some duties. The set of duties should include the right of access to member records, directors and, committee members. Staff should be required to sign a secret agreement. This agreement is a written undertaking of an individual to hold private matters in strict confidence. After assuming duty, each institution should establish administrative & physical controls to ensure the protection of records and confidential information from unwarranted disclosure & physical damage or dismantling.
  •  The controls instituted should be connected to the degree of sensitivity of the records and information but, at a minimum, would make sure that:
    • Documents and records are protected from the public.
    • The region in which the records and information are stored is supervised not only during working hours but other times as well to prevent unauthorized persons from entering the area or obtaining access to the records.
    • The general manager of each institution should be responsible for ensuring that employees subject to his/her supervision are advised of the seriousness of maintaining secretiveness.
    • Employees should be made conscious of their responsibilities to protect the security of personal information, ensure its accuracy, relevance, and completeness, and avoid unauthorized disclosure either orally or in writing. It is advisable that employees or managers must not practice infringement of secretiveness.
    Such as:
    • Give access to persons' un-authorized copies of the Registered members or the membership mailing list.
    • Indiscriminate discussion about the transactions of a member, or the business affairs of the institution, to persons not authorized to access the information or records.
    • Selection of not suitable locations for board or committee meetings or employee discussions of confidential matters, such as public places (i.e., parks, hotels, etc.).
    • Mailing secretive information or records to the business office of the recipients when there is a dilemma for the delivery of the confidential information.
    • Reviewing confidential information in a fashion which may cause disclosure of information to unauthorized persons due to neglect, lack of control, or carelessness (reading in public places or leaving confidential material un-attended).
    • Employing volunteers to assist in clerical (official) duties of the institution without instructing them on the rules of confidentiality.
  • Conflicts of interest
    Every member of the organization, whether director, committee member, officer, or employee, has a responsibility of loyalty to the institution & must turn a blind eye to their personal interests when they conflict or risk conflict with the best interests of the institution. The Code of Conduct (CoC) must acknowledge these rules and should also incorporate policies to safeguard against violation of them.
  • Restricted party transactions
  • Unethical conduct
    Forms of unethical or inappropriate conduct which should be prohibited either in policy or directly in the Code of Conduct include:
    • Abuse of the personal privileges of office.
    • Secret commissions.
    • Inappropriate gifts.
    • Acts of slander and libel.
    • Nepotism.
    • Employee discrimination and harassment.
    • Criminal acts.
    • Reporting of questionable and fraudulent acts.

Code of Ethics

A Code of ethics helps members understand what is right or wrong. The codes are disclosed publicly & hence addressed to all staff members of the organization and provide information on how the company does business. Violation of the code of ethics (CoE) by any member may result in termination or dismissal from the organization. A Code of Ethics is a document issued by the top-level management, which consists of a set of principles designed:
  • To guide the members of the organization to carry out business honestly and with integrity.
  • It describes the core values that guide the decision-making process of the organization.
  • CoE provides ethical standards which are to be followed by the members of the organization.
  • CoE sets out general guidelines to assist individuals in applying their judgment concerning a suitable behavior in a given situation.

Differences Between Code of Ethics and Code of Conduct

Code of Ethics (CoE) Code of Conduct (CoC)
A Code of Ethics (CoE) is an aspirational document issued by the board of directors containing the organization's core ethical principles, principles, and ideals. A Code of Conduct (CoC) is a directional document containing specific practices and behaviors followed or restricted under the organization.
Code of Ethics (CoE) is general. The Code of conduct is specific.
CoE is the source of CoC. Code of Conduct are originated from the code of ethics, and it converts the rules into specific guidelines, that must be followed by the members of the organisation.
Code of Ethics is a shorter document. while code of conduct is comparatively longer document.
CThe Code of Ethics regulates the judgment of the organization. Code of Conduct regulates the actions
Code of Ethics (CoE) is publicly available, i.e., anyone can access it. Conversely, Code of Conduct is addressed to employees only.
Code of Ethics (CoE) focuses on values or principles. On the other hand, the Code of Conduct is focused on compliance and rules

Similarities between CoE and CoC

  • Both a Code of Ethics (CoE) and a Code of Conduct (CoC) are similar as they are used to strive to encourage specific forms of behavior by employees.
  • Ethics guidelines attempt to guide values and choices to influence decision making. Conduct regulations assert that some specific actions are appropriate, others inappropriate. In both cases, the organization desires to obtain a narrow range of acceptable behaviors from employees.