Shaina Bee M.

Hansoc
BSA-3
CHAPTER 1: INTRODUCTION TO CORPORATE GOVERNANCE
Learning Activity 1.1
1. Create your own definition of GOVERNANCE.
- For me, governance has been defined as the actions and decisions or the power of ruling or
governing the government, administration, country and organization.
2. What is the importance of GOVERNANCE in any organization? Elaborate your answer.
- Governance is really important in an organization because governance is used into many aspects
because it can help to make a better actions and decisions to rule and govern the organization
better.
3. Explain whether the following statement is true or false.
“Governance is exercised only by the government of a country?”
- False, Governance is not exercised only by the government of a country but governance
comprises all of the process of governing. It can be applied to non-politics organizations like in
business, schools and the likes.
4. Explain how governance can be used in the following contexts and give appropriate examples.
a. National Governance – A national government is the government or the political authority
that controls a nation. A national governance requires a national army, enough power over it
states or provinces to set and maintain foreign policy and the ability to collect taxes. National
governance is responsible for maintaining internal and external security and stability that
means they are responsible for establishing national laws.
b. Local Governance – A local governance is a right and capability of a community executed
directly in compliance with the established statutory procedures and through representatives
of local authorities that are affiliated with the system of state government bodies. It is the
public administration of towns, districts, countries and cities. Notice that this type of
government includes both country and municipal government structures. The organization of
local governments varies depending on the state. However, all local governments derive their
authority from the state in which they are located.
c. Corporate Governance – It refers to the systems of rules, practices and processes by which
companies are governed. Board of directors are responsible for the governance of their
companies. The shareholders’ role in governance to appoint the directors and the auditors and
to satisfy themselves that an appropriate governance structure is in place.
d. International Governance – Global governance or world governance is a movement towards
political cooperation among transnational actors, aimed at negotiating responses to problems
that affect more than one state or region.
5. In today’s situation caused by COVID-19 pandemic, what is the significant role of
GOVERNANCE in the government and in the private sector? Cite a scenario/topic in the
Philippines here governance involved. What is your stance in this? Defend your answer.
- In today’s situation like what we are facing until now caused by COVID-19 pandemic. The role
of the governance in every aspects of the government and in the private sector is very much
needed. It’s been a year ago since the pandemic starts and until now there is still a pandemic. This
pandemic caused a lot of sufferings, challenges and deaths to our country and to the whole world.
There’s a lot of Filipinos who suffered and died because of the pandemic. COVID-19 changes a
lot and created a very big impact into everybody affecting our everyday lives especially the
 studies and works. In this time of pandemic, we must need the support and help of those who are
in power to rule and guide us to face this pandemic and help us get through this pandemic.
Learning Activity 1.2
6. Explain briefly the eight basic characteristics of good governance.
Participation – the participation of both men and women is important to be able to voice out their
own opinions through legitimate institutions or representatives.
Rule of law – good governance requires fair legal frameworks that are enforced impartial for the
full protection of the stakeholders.
Transparency – it should be freely available and directly accessible to those who will affected by
governance policies and practices and also the resulting outcomes. In transparency, the
information must be provided in easily understandable forms and media.
Responsiveness – good governance requires that organizations and their processes are designed to
serve the best interests of stakeholders within a reasonable timeframe.
Consensus Oriented – good governance requires consultation to understand the different interests
of stakeholders in order to reach a broad consensus of what is in the best interest of the entire
stakeholder group and now this can be achieved in a sustainable and prudent manner.
Equity and Inclusiveness – the organization that provides the opportunity for its stakeholders to
maintain, enhance, or generally improve their well-being provides the most compelling message
regarding its reason for existence and value to society.
Effectiveness and Efficiency – good governance means that the processes implemented by the
organization to produce favorable results meet the needs of its stakeholders, while making the
best use of resources.
Accountability – it is a key tenet of good governance. For who is accountable for what should be
documented in policy statements. In general, an organization is accountable to those who will be
affected by its decisions or actions as well as the applicable rules of law.
7. In your opinion, what is the most essential characteristics of GOOD GOVERNANCE? Explain
your answer.
- For me, the most essential characteristics of good governance is accountability, because
accountability is the fundamental requirement of a good governance. You must always need to be
accountable in everything, to report, explain and be answerable for the consequences of decisions
it has made on behalf of the people serves shareholders, costumer and other stakeholders.
8. TRANSPARENCY and ACCOUNTABILITY are synonymous. Explain whether the statement is
correct or not.
Transparency has become synonymous with accountability. Transparency is an accountability in
itself. Transparency is an instrument through which accountability is articulated. Transparency
grants wider access to information than accountability.
9. Explain whether the following statement is true or false.
“Responsiveness usually results to effectiveness and efficiency.
False, the responsiveness is for their stakeholders while the effectiveness and efficiency are for
the protection on environment.
Learning Activity 1.3
10. What is CORPORATE GOVERNANCE? Cite at least 2 definitions of CORPORATE
GOVERNANCE from other references. Do not forget to indicate your source.
- Corporate governance is the collection of mechanisms, processes and relations used by various
parties to control and to operate a corporation. (en.m.wikipedia.org)
 - Corporate governance is the system by which companies are directed and controlled. Board of
directors are responsible for the governance of their companies. (icaew.com)

11. Explain the corporate governance structure.

- The corporate governance structure specifies the distribution of rights and responsibilities
among different stakeholders such as the board, managers or shareholders, and spells out the rules
and procedures for decision-making in corporate affairs.
12. State the purpose of corporate governance.
- The purpose of corporate governance is to facilitate effective, entrepreneurial and prudent
management that can deliver long-term success of the company. The fundamental aim of
corporate governance is to enhance shareholder’s value and protect the interest of other
stakeholders by improving the corporate performance and accountability. It is also about the
board of directors of a company does, ho it sets the value of the business firm.
13. Aside from what is indicated in this reference, what else could be the other purposes of corporate
governance? Elaborate your thoughts.
- The other purposes of corporate governance is to help build an environment of trust,
transparency and accountability necessary for fostering long-term investment, business integrity
and financial stability, thereby supporting stronger growth and more inclusive societies. The
purpose of corporate governance is important because it facilitates effective management that can
deliver long-term success to a company and is the processes, mechanisms, and relations by which
companies are directed and controlled.
Learning Activity 1.4
14. Explain the basic objectives of corporate governance.
Fair and equitable treatment of shareholders – All shareholders deserve equitable treatment and
this equity is safeguarded by good governance structure in any organization.
Self-Assessment – Corporate governance enable firms to assess their behavior and actions before
they are scrutinized by regulatory agencies.
Increase shareholders’ wealth – Other corporate governance’s main objective is to protect the
long-term interest of the shareholders.
Transparency and full disclosure – Good corporate governance aims at ensuring a higher degree
of transparency in an organization by encouraging full disclosure of transaction in the company
accounts.
15. Explain the three basic principles of effective governance.
- Accountability means that actions have consequences. When corporate governance embodies
the principle of accountability, shareholders know that performance will be measured. They know
that good performance will be rewarded, and poor performance will not. And, most important,
they know that misconduct will not be tolerated. Without transparency, it is difficult to have
accountability. After all, shareholders can only hold corporate directors accountable if they know
what is going on at the companies and business they own.
 CHAPTER 2: CORPORATE GOVERNANCE RESPONSIBILITIES AND
ACCOUNTABILITIES
Learning Activity 2
Answer the following:
1. “Small business enterprises do not need governance.” Do you agree? Explain.
I do not agree, whether the business is small or big enterprises it must need governance in order
to operate the business better and progress smoothly. Good governance is relevant to every kind
of business.
2. Does good governance require absolute rules that must be adopted by all organization? Elaborate.
- No, it does not require absolute rules, rules are made and should be followed by the company no
matter what. It all depends on the employees. They should follow the rules set by the company
the best they can. There are no absolute rules which must be adopted by all organizations.
3. What is the essence of any system of corporate governance?
- The essence of any system of good corporate governance is to allow the board and management
the freedom to drive their organization forward and to exercise that freedom within a framework
of effective accountability. Good governance is good governance because of the good word.
4. Where does the board of directors derive its authority?
- The Board of Directors has the authority to approve policies and procedures to consider
business strategies, business action plans, business budget, organization structure, salary
structure, the company’s compensation and benefits scheme and structure, and manpower
requisition. The board of directors derives its authority from the shareholders or owners.
5. To whom is the board of directors accountable?
- The Board of Directors is accountable to shareholders for the company’s business operations
and corporate governance in accordance with management objectives and maximization of
shareholder’s benefits within the framework of sound business ethics while taking into account
the benefits of all stakeholder groups.
6. On what aspects do shareholders demand accountability from the board of directors?
- Stewardship
- Quality of internal control
- Financial performance
- Financial transparency
- Composition of the board of directors and the nature of its activities
7. What is the management’s responsibility as far as financial reporting is concerned?
- Management is responsible for the objectivity and integrity of the financial statements.
Management has established systems of internal control that are designed to provide reasonable
assurance that assets are safeguarded from loss or unauthorized use, and to produce reliable
accounting records for the preparation of financial information.
8. Describe the broad role of shareholders in a corporation.
- Shareholders make a financial investment in the corporation, which entitles those with voting
shares to elect the directors. If shareholders are not satisfied with the performance of the
directors, they may remove the directors or refuse to re-elect them.
9. Describe the board role of the Board of Directors.
 - The role of board of directors is to ensure the company’s prosperity by collectively directing the
company’s affairs, while meeting the appropriate interests of its shareholders and relevant
stakeholders.
10. What are the specific activities of the board of directors?
- Establishing the organization’s vision, mission, values and ethical standards
- Delegating an appropriate level of authority to management
- Assuming the responsibility for the business relationship with CEO including his or her
succession, appointment, performance remuneration and dismissal.
- Demonstrating leadership
- Overseeing aspects of the employment of the management team including management
remuneration, performance and succession planning.
- Crisis management
- Ensuring effective communication with the shareholders other stakeholders
- Recommending auditors and ne directors to the shareholders
- Appointment of the CEO and corporate secretary
 CHAPTER 3-4 SECURITIES AND EXCHANGE COMMISION CODE OF CORPORATE
GOVERNANCE
Activity 3.1
Below is a summary of the SEC corporate governance requirements of the publicly-listed companies. For
each requirement, state how it is intended to help to address the risk of fraud in publicly traded
organizations.
a. Boards need to consist of at least 3 independent directors or 1/3 of the board which is higher.
- The occupancy of independent directors to the board is to ensure that there is no conflict of
interest between each number of the board and it leads to more objective decision making.
b. Boards need to hold regular executive sessions of independent directors without management
present.
- It is because the NEDs are bound to inspect and look over the organizations management
performance in meeting the organizations objectives and goal.
c. Boards must have a corporate governance committee composed of 3 independent directors.
- It ensures the compliance and proper observance to the corporate governance principles and
policies.
d. The corporate committee must have a written charter that addresses the committee’s purpose and
responsibilities, and there must be annual performance evaluation of the committee.
- It defines the accountabilities and the roles of each committee to avoid any overlapping
functions and can be used as a basis of assessing the committee’s performance.
e. Boards must have an audit committee with a minimum of three independents.
- Just be responsible for establishing and maintaining adequate, efficient and effective internal
control framework. Also, provide assurance in the areas of reporting, monitoring compliance with
the laws, regulations and internal policies, effectiveness and efficiency of operations and
safeguarding of assets.
f. The audit committee must have a written charter that addresses the committee’s purpose and
responsibilities, and the committee must produce an audit committee report; there must also be an
annual performance evaluation of the committee.
- Just safeguard the company’s resources and ensure their effective utilization. Prevent
occurrence of fraud and other irregularities. Also, protect the reliability and accuracy of the
company’s financial data and ensure compliance with applicable regulations and laws.
Activity 3.2
Below is a summary of the SEC listing requirements for the audit committee responsibilities of
companies listed on the stock exchange. For each requirement, state how it is intended to help to address
the risk of fraud on publicly listed traded organizations
a. Obtaining each year a report by the external auditor that addresses the company’s internal control
procedures, any quality control or regulatory problems, and any relationships that might threaten
the independence of the external auditor.
- Object a better understanding of the entity’s nature of control as well as its internal control to
better identify and to look over the risks, fraud or error that might occur.
b. Discussing the company’s financial statements with management and the external auditor.
- For the objectivity and integrity of the financial statements. External auditors and managements
ensure that the responsibility is with compliance with the established financial laws and
standards.
 c. Discussing in its meeting the company’s earnings press releases, as well as financial information
and earnings guidance provided to analysts.
- Discuss and support the major financial reports and information to ensure timely and accurate
dissemination of information.
d. Discussing in its meeting policies with respect to risk assessment and risk management.
- Effectiveness and functionality
e. Meeting separately with management, internal auditors, and external auditor on a periodic basis.
- To review the results of an audit of the committees if it is under the generally accepted auditing
standards.
f. Reviewing with the external auditor any audit problems or difficulties that they had with the
management.
- To review such changes in auditing and accounting policies and find any significant problems
encountered in the course of their auditing.
g. Setting clear hiring policies for employees or former employees of the external auditors.
- Accountability and transparent
h. Reporting regularly to the Board of Directors.
- To oversight responsibilities in areas such as an entity’s financial reporting, internal control
systems, risk management systems and the internal and external audit functions.
Activity 4
Answer the following questions:
1. Assume that the management had determined that its organization’s audit committee is not
effective. How do the weakness in the audit committee affect management’s evaluation of
internal control over financial reporting? Would an ineffective audit committee constitute a
material weakness in internal control over financial reporting? State the rationale for your
response.
- The Audit Committee is in charge in monitoring the choice of accounting principles and
policies which are practice in the business organization, as well as the performance, standards
in hiring, and ensuring absolute independence of the external auditors. They are responsible
in overseeing the disclosure processes and the financial reporting. The internal control and
risk management will not be properly addressed which means a huge loss in the resources of
the company.
2. Why is there a need for a corporation to maintain a comprehensive and cost-efficient
communication channels to shareholders and other investors?
- The company should need to maintain a comprehensive and cost-efficient communication
channels for disseminating relevant information. This channel is crucial for informed
stakeholders, decision making by investors and other interested users of the information.
3. What is the objective of the company in having a strong and effective internal control
system?
- A strong and effective internal control system ensures ethical and efficient functioning of
the company’s operations, compliance and financial reporting. It aids business organizations
in loss prevention and the practice of the right of business procedures, it also aids the accurate
reporting of financial information, identification of problems and solutions. It also aids in
ensuring that the company is complying with all the applicable external and internal rules and
regulations.
4. What is the purpose of having independent internal audit function in a publicly-listed
corporation?
- The purpose of having an independent internal audit function in a publicly-listed
corporation is to provide independent assurance in a business organization’s risk
management, corporate governance, and internal control processes.
5. Give at least four responsibilities of the Chief Audit Executive.
1. Establishes a risk-based internal audit plan, including policies and procedures, to
determine the priorities of the internal audit activity, consistent with the organization’s
goals.
2. Spearheads the performance of the internal audit activity to ensure it adds value to the
organization.
3. The periodically reviews of the internal audit charter and presents to the senior
management and the board of audit committee for approval.
4. Communicates the internal audit activity’s plan, resource requirements and impact of
resource limitations, as well as significant interim changes, to senior management and
the audit committee for review and approval.
6. Enumerate the activities of the Risk Management Department in a publicly-listed corporation.
a. Defining a risk management strategy
b. Identifying and analying risks exposure relating to the economic, environmental,
social and governance (EESG) factors and the achievement of the organiation’s
strategic objectives
c. Evaluating and categorizing each identified risk using the comoanys predefined risk
categories and parameters
d. Establishing a risk register ith clearly refines, prioritied and residual risk
e. Developing a risk mitigation plan for the most important risks to the company, as risk
defined by the risk management strategy
f. Communicating and reporting significant risk exposures including business risks (i.e.
Strategic, compliance, operational, financial and reputation risks), control issues and
risk mitigation plan to the board risk oversight committee.
g. Monitoring and evaluating the effectiveness of the organization’s risk management
processes.
7. To what may the shareholders’ right relate?
a. Pre-emptive rights
b. Dividend policies
c. Rights to propose the holding of meetings and to include the agenda items ahead of the
scheduled annual and special shareholders meeting
d. Right to nominate candidates to the board of directors
e. Voting procedures that would govern the annual and special shareholders meeting
f. Nomination process
8. How may participation of employee in corporate governance be encouraged?
- The participation of the employee in corporate governance is encourage to create a
symbiotic environment, realizing the company’s goals and participate in its corporate
governance processes.
9. True or False. Sustainability reporting includes voluntary corporate disclosures about
sustainability initiatives, plans and associated outcomes.
- TRUE
10. True or False. The term non-financial reporting, corporate social responsibility reporting and
triple bottom-line reporting are each sustainability-related terms.
- TRUE
11. Define the term non-financial reporting, corporate social responsibility reporting, and triple
bottom-line reporting. How do these terms relate to sustainability reporting?
a. Non-financial reporting is a form of transparency reporting where businesses formally to
disclose certain information not related to their finances, including human rights
information.
b. Corporate social responsibility reporting is a periodical/annual report published by
companies to report their corporate social responsibility actions and results.
c. It is a report on the financial, social, and environmental performance of a company a
given period of time.
12. What factors have driven the demand for sustainability reporting?
- Sustainability reports help the company to recognize its importance and role in the
interdependence of business and society, promoting mutually beneficial relationship that
allows the company to grow its business while contributing to the advancement of the society
it operates.
13. Why is there a demand for independent assurance on sustainability reporting?
-There is a demand for independent assurance on sustainability reporting, in order for
business organizations to consider their impact on sustainability issues, enabling them to be
transparent about the risks and opportunities they face.
14. Is it unethical for a company to provide a sustainability report, but provide no assurance on
the reliability of the information contain therein? Explain your answer.
- It is unethical for a company to provide a sustainability report but provide assurance on the
reliability of the information contained in such report, the basis of such report must be
disclosed which serves as a reliable assurance about the business organization’s sustainability
condition.
 CHAPTER 5: INTRODUCTION TO ETHICS
Learning Activity 5
Answer the following:
1. Give your on definition of ETHICS.
Ethics is a moral duty to do what is good and to avoid what is evil.
2. What is the basic purpose of a code of ethics for a profession?
- The basic purpose of a professional code of ethics is to provide members of a profession
with guidelines for maintaining a professional attitude and conducting themselves in a
manner that will enhance the stature of their discipline.
3. Name and explain the characteristics and values associated with ethical behavior.
Integrity – Do what you think is right even when there is a great pressure to do otherwise.
Be honorable, principled and upright. Just fight for your beliefs.
Honesty – Being honest and truthful is particularly important in all dealings and do not
mislead or deceive others by misrepresentations, overstatements, selective omissions, or any
other means.
Trustworthiness and Promise keeping – Be worthy of trust. Give relevant information and
correcting misapprehensions of fact and make every reasonable effort to fulfill the letter and
spirit of promises and commitments.
Loyalty (Fidelity) and Confidentiality – Just demonstrate fidelity and loyalty to persons and
institutions by friendship in adversity, support and devotion to duty. Do not use or disclose
information learned in confidence for professional advantage.
Fairness and Openness –Just be fair and just in all dealings. Do not exercise power
arbitrarily, and do not use overreaching nor indecent means to maintain or gain any
advantage nor take undue advantages of another’s mistake or difficulties. Be open-minded
and be willing to admit if you are wrong and where appropriate change their positions and
beliefs.
Caring for Others – Be caring, compassionate, benevolent and kind to help those in need and
seek to accomplish their business objectives in a manner that causes the least harm and the
greatest positive good.
Respect for Others – It is one of the important characteristics and values associated with
ethical behavior because an ethical leader shows respect to all of the members of the team
by valuing theirs contributions, being compassionate, by listening to them attentively, and
being generous while considering opposing viewpoints.
Responsible Citizenship – Responsible citizen obey laws, rules and regulations relating to
their business activities.
Pursuit of Excellence – Be excellence in performing the duties. Be well prepared and
informed and constantly endeavor to increase their proficiency in all areas of responsibility.
Accountability – Be accountable, accept and acknowledge accountability for the ethical
quality of their decisions and omissions to themselves, their communities and companies.
4. Explain why ethical behavior is necessary.
- Ethical behavior must always necessary especially in our self and also to our community
and society to function it in an orderly manner because ethics can help us to create and make
a better decisions, actions and behaviors. It also makes us understand our self even better
and get connected to the society.
5. What are some of the reasons why people act unethically?
 - The reasons why people act unethically is that, Person’s Ethical Standards differ from
General Society and The Person Chooses to Act Selfishly
6. Describe some principles and/ or values that are related to
a. Personal ethics – Respect for the right of others, it is important to respect one’s opinion
because it help us to express ourselves freely and to be feel safe. By respecting others is
that you can show to them that you give importance to them and you accept somebody
for ho they are, even when they are different from you or you do not agree with them.
b. Professional ethics – Integrity, just do what you think is right even when there is a great
pressure to do otherwise. Be honorable, principled and upright. Just fight for your
beliefs.
c. Business ethics – Concern for the environment, it is important for us to be concerned
into our environment because it is the place where we live. A clean environment is
essential for our healthy living because, when it becomes polluted it can give problem to
us and would create harmful impacts that could possibly affect us especially our health.
We must need to take care for our environment for us to have a safe and healthy
environment.
7. Explain why ethical behavior is necessary in the practice of one’s profession.
- Being professional not just requires only wearing a nice suit but also it requires ethical
behavior that drives interactions with other employees, costumer and leadership. It also
guides how someone performs her job and how she treated the persons she worked with. At
work, ethical behavior is the moral code of guiding employee’s behavior.
 CHAPTER 6: BUSINESS ETHICS
Learning Activity 6
Answer the following:
1. What does business ethics mean?
- Business ethics refers to the moral rules, conduct and behavior that govern how business can
operate, how business decisions is implemented, applied and made and how people are treated.
Business ethics is very important to be made to conduct and operate the business in an ethical
manner.
2. What is the main objective of observing ethical behavior in business?
- The main objective is to help the businesses, big or small businesses, even those start-up
businesses. To determine what business actions and business practices are right and wrong. This
is to guide them in making a great, better and right decisions without having to harm anyone
outside and within the business.
3. Name the other purposes of business ethics.
- To show that common practices which they have considered to be right because they see other
businesses doing it, it is not good because it might actually be wrong.
- To serve as a standard or ideal upon which businesses conduct should be based.
- To make businessmen realize that they cannot employ double standards with regards to actions
of other people and their on action.
4. Explain the economic impact of observing business ethics.
- The economic impact of observing business ethics can be represented by how wages
simultaneously affect the employee and the economy respectively. If employees are paid fairly,
and if the costumer are provided with the good value of the products, then it would definitely
have a positive impact on how the economy will continue to run smoothly.
5. What is the impact of business ethics to society in general?
- The impact of business ethics can be understood by perceiving ho huge these businesses’ roles
are. If these business practice unethical behavior within their entity, then it would reflect to the
people residing it thus affecting the whole society the moment they step out of that company. The
practices they observe inside the company could be taken into life outside the business. Also the
impact of business ethics might actually affect the price and value of the products thus affecting
the consumers and the society in general.
6. Explain how business managers could act ethically.
Business Managers could act ethically.
- Be actively concerned for his subordinates and treat them fairly by assuring the right of
reasonable access and appeal to superiors.
- Allow subordinates to have a right to information on matter affecting them.
- Avoid abuse of power for professional gain, advantage or prestige.
- Disclose the fact to his supervisor whenever his personal business of financial interests conflict
with those of the company
- Just always cooperate with his colleagues and never attempt to secure personal advantage at the
expense of others.
- Jus fully evaluate the likely effects on the employees and the community of future decisions.
7. Describe the inherent conflict between ethics and pursuit of profit.
- The inherent conflict between ethics and pursuit of profit. The implication in this is that if the
company has to choose between ethics which is doing the right thing and profits. Profits always
win because good ethical behavior is the best long-term strategy for a company. ------
 CHAPTER 7: COMMON UNETHICAL PRACTICES OF BUSINESS
ESTABLISHMENTS
Learning Activity 7
Answer the following:
1. What are the two most common types of unethical practices of business establishments as far the
products or customers are concerned? Discuss each briefly.
- Misrepresentation is the action or the offense of giving a false misleading account of the
nature of something. Misrepresentation has to types, the direct misrepresentation which is the
actively misrepresenting about the product or costumers and the indirect misrepresentation which
is characterized by omitting adverse or unfavorable information about the product. Under the
Direct Misrepresentation are the Deceptive packaging, Misbranding/Misleading, False or
Misleading Advertising, Adulteration, Weight understatement or Short Weighting, Measurement
understatement or Short Measurement, Quantity understatement or Short Numbering, Caveat
Emptor, Deliberate withholding of information and passive deception.
- Over Persuasion is the process of appealing to the emotions of a prospective customer and
urging him to buy an item of merchandise that he needs. Persuasion is used for the sole benefit of
selling a product without considering the interest of the buyer is unethical. The common instances
of over-persuasion include the following examples:
Urging a costumer to satisfy a low priority need for merchandise.
Playing upon intense emotional agitation to convince a person to buy.
Convincing a person to buy what he does not need just because he has the capacity or money to
do so.
2. Give and explain briefly at least three ways of directly misrepresenting products.
- Deceptive packaging, in this the product is packed in such a way that it misleads to the customer
regarding on the shape, size, quantity and many others.
- Mislabeling/Misbranding, its labeling is a false statements or misleading in any particular.
- False or Misleading Advertising, it is described as the misconduct or crime of transmitting and
publishing an advertisement containing a false, deceptive or misleading statement to promote the
sale of property, goods or services to the public.
3. How is indirect misrepresentation of a product undertaken?
- Indirect misrepresentation is characterized with the aid of omitting unfavorable or adverse
information about the product and services. Among the practices involving indirect
misrepresentations are the caveat emptor, deliberate withholding of information and business
ignorance.
4. Explain the concept of “caveat emptor”.
- Caveat emptor means “let the buyer beware”, it is the practice very common among salesmen.
“Let the buyer beware”, under this concept, the seller is not obligated to reveal any defect in the
product or service she is selling. It is the responsibility of the customer to determine for the
defects of the product. As a customer, you must always need to check the product to see if it is
good or if it is damaged. Caveat emptor is indirect misrepresentation and unethical because a
seller is a witness for the good he is selling. She testifies to its features, uses, qualities and nature.
As witness, it is her obligation to tell the truth and nothing but the truth about her product.
5. When does over-persuasion become unethical?
- Persuasion becomes unethical when it is used for the benefit of selling a product without
considering the interest of the buyer.
6. What is “interlocking directorship” and why could it lead to unethical actions of a member of the
board of directors?
- Interlocking directorship is often practice by a person who holds directorial positions in two or
more corporations that do business with each other. This practice may involve the interest conflict
of interest and can result to disloyal selling. It is happens when the person is compelled to decide
which of the two corporation’s interest should be protected or upheld.
7. Why “insider trading” considered as an unethical practice?
- Insider trading is occurs when another person or a broker with access to confidential
information uses the information to trade in shares and securities of a corporation, thus, it is
unethical because it’s giving him an unfair advantage over the other purchasers of these
securities.
8. What are some of the unethical practices that executive officers may be guilty of?
- Executive officers may be guilty of unethical practices.
Here are some:
a. Having employees do work unrelated to the business
b. Making employees signs documents showing that they are receiving fully what they are
entitled to under the law when in fact they are only receiving a fraction of what they are supposed
to get.
c. Making false claims about losses to free themselves from paying the compensation and
benefits are provided by law.
d. Loose or ineffective controls. Managers do not provide adequate controls to remove
temptation and to prevent or discourage employees from engaging in unethical practices.
e. Claiming a business trip to be a vacation trip.
f. Sexual harassment
9. Cite some unethical practices of employees to their employers.
- There are some employees who are not mindful of their moral obligations to their employees.
They take advantage of their positions and the trust of their employees by committing unethical
practices may be classified into conflict of interest and dishonesty.
Conflict of interest arises when an employee who is duty bound to promote and protect the
interests of her employer violates the obligation getting himself into a situation where her
decisions or actuation is influenced by what he can gain personally from it rather than hat her
employer can gain from it.
Dishonesty, business ethics is not just limited to business transactions with outside parties. It also
covers the employer relationship especially with respect to an employee’s honesty as she carries
out her assigned duties in the office.
10. Distinguish between direct misrepresentation and indirect misrepresentation.
- Direct misrepresentation is the practice of actively misrepresenting something about the
product, while the indirect misrepresentation is the practice of omitting adverse information about
the product.
 CHAPTER 8: ETHICAL DILEMMA
Learning Activity 8
Answer the following:
1. Describe an ethical dilemma. How does a person resolve an ethical dilemma?
- An ethical dilemma is the problem in a decision-making process where any of the available
options requires the agent to violate or compromise on their ethical standards. It is also a situation
that a person faces in which a decision must be made about the appropriate behavior. Although
we face many ethical and moral problems in our lives, most of them come with relatively
straightforward solutions. Every person may encounter an ethical dilemma in almost every aspect
of their life, including personal, social, and professional. To resolve an ethical dilemma you can
use the six-step approach which are, Obtain the relevant facts, Identify the ethical issues from the
facts, Determine who is affected by the outcome of the dilemma and how each person or group is
affected, Identify the alternatives available to the person ho mist resolve the dilemma, Identify the
likely consequence of each alternative, Decide the appropriate action.
2. Why is there a special need for ethical behavior by professionals?
- There is a special need for ethical behavior by professionals to maintain public confidence in the
profession, and in the services provided by members of that profession. All professionals are
expected to be competent, perform, services provided by members of that profession with due
professional care and recognize their responsibilities to clients. Most other professionals, such as
attorneys, are expected to be an advocate to their clients.
3. After accepting in an engagement, a consultant discovers that the client’s industry is more
technical than he realized and that he is not competent in certain areas of operation. What are the
consultant’s option?
- The following are the consultant’s option:
1. Withdraw from the engagement
2. Obtain the expertise through continuing education and self-studies
3. Hire someone who has the expertise
4. Work on a consulting basis with another consultant firm

Exercises
1. David Lawyer, sets up a small loan company specializing in loans to business executives and small
companies. David does not spend much time in the business because he spends full time with his
law practice. No employees of David Law Firm are involved in the small loan company.
a. Identify and discuss the ethical implication’s David’s act.
- David must need to spend much time in his small loan company because if he does not spend
much more on oi it would result to mismanagement and poor supervision that may eventually
lead to a loss or in worst cases and bankruptcy. With this, it would affect his employees who
are depending on their daily living on their salaries, his assets which here invested to the
company, the clients of his company whom ere reliant to the services the company offers and
to his emotional and mental health. The practice of this profession may greatly affected due to
the fact that his concentration is shared with other entanglements.
One of the most probable action to this problem is that David should hire a trustworthy
manager ho ill supervise his small loan company and another action is that David must need to
divide equally his tie to attend the needs of small both his loan company and his profession.
2. Mang Toot’s fast food chain has been known in the business not just only for its great tasting food
and excellent service but also for its cleanly prepared dishes. One day, Emong, a service crew of
Mang Toot’s Makati branch, as preparing the gravy. He was unaware that the starch he used was
already expired. He only noticed it after sometime and the gravy had been served to some
customers. Knowing that it might cause harm to the customers, he immediately told Bartolome, the
branch manager, about it. Bartolome told Emong not to tell anyone about it, besides, no one is
complaining.
a. What is the moral issue in this case?
- The moral issue in this case is that Emong become careless to check the ingredients that he
may use before he serve it. Just always check the ingredients you are going to use because it
would cause harm to someone’s health if it is expired. The right that he supposed to do that
time is that to tell the manager which is Bartolome that the gravy he served as already expired
so that they could may action about it and by that they can show their good side. In this case
we must not be like Bartolome because he acted immoral and it is not good for their costumer.
b. Use the six-step approach to resolve the case.
- So by using the six-step approach we can resolve the case.
We need to determine whether there is an ethical dilemma, identify the key values and the
principle involved, rank the values or ethical principles which are the most relevant to issue or
dilemma, We must need also to develop a plan that is consistent to the with the ethical
priorities that have been determined as the central to the dilemma. Must implement the plan,
utilizing the most appropriate practice skills and competencies and must reflect on the outcome
of this ethical decision making process.
 CHAPTER 9: CORRUPTION
Learning Activity 9
Answer the following:
1. Explain what corruption is.
- It is the politicians misusing of public money or granting public job or contracts to their
families, friends, and sponsors. Corruption is where the corporations bribing officials to get
lucrative deals. In a simple word, corruption is a form of criminal offense or dishonesty
undertaken by a person or organization entrusted with a position of authority to acquire illicit
benefit or abuse power for one’s private gain.
2. Give examples of how corruption can take place.
- Corruption takes place in a wide variety of ways. Corruption takes place because some
individuals are willing to use illicit means to maximize personal or corporate gain. Corruption can
also takes place by the greed of money desires, weak civil participation and low political
transparency, higher levels of market and political monopolization.
3. What are some factors that contribute to the commission of corruption?
a. Greed of money desires
b. Lo press freedom
c. Higher levels of market and political monopolization
d. Low economic freedom
e. Higher levels of bureaucracy and inefficient administrative structures
f. Low levels of democracy, weak civil participation and lo political transparency
4. Explain the characteristics of corruption.
- Corruption is the abuse of entrusted power and elected authority for private profit.
a. Recipient and Payers – corruption is the abuse of entrusted power and elected authority for
private profit.
b. Extortion – the question is “who is to blame”, shifts from person who pays to the person who
extorts and receives.
c. Lubricant of Society – without an occasional gift upon entering into a contract for the supply
of the service or a product, such contracts might be assigned to others.
d. An ethical dilemma – many consider corruption to be an ethical problem, a behavioral
problem and refer to it as a being sinful, a “wrongdoing”. It is a problem to be solved by the
means of personal reform.
e. Poverty alleviation – low pay does not imply the person concerned is corrupt. The greater
importance for the prevention of corruption at a lower level in all kinds of hierarchies, is the
clearness and transparency of the rules and of the decision making process, and the internal
control exercised on the application of the rules.
f. Culture – when you received a gift, you will show your gratitude by reciprocating the gift you
share with your family and friends.
g. Kindness among friends
- Is giving a gift is a sign of thoughtfulness or it is hiding a particular purpose, an expected
return in the future? Is it a friendly turn or is it an investment? You must be kind to others
without expecting in return.
5. Describe some ill effects of corruption.
- Corruption can hurts everyone. The effects of corruption goes beyond the corrupt individuals,
the innocent colleagues who are implicated, or the reputation of the organizations they work for.
 The corruption erodes the trust we have in the public sector to act in our best interests. Corruption
also wastes our taxes or rates that have been earmarked for important community projects.
6. Ask family, neighbors, colleagues at works, ask their opinion on this subject.
Do they support the opinion that it is wrong to bribe politicians and public officials, whereas, the
other way round, they themselves bribing these officials for their own profit would not be wrong?
Would they denounce someone bribing an official or politician? Why and how?
- Many of us go one step further, they do not blame the politicians and or public officials for
willingly accepting bribes. They also often allege that those having authority in our society asked
to be bribed or give us the opportunity to bribe. The person who pays the person who extorts and
receives. There’s no escaping from it, for if you don’t pay, you are bound to fall behind. They do
not support bribing with politicians and public officials because it is a way corruption.
7. Did you ever refuse to pay a bribe, or would you if you had the potential to ask for a bribe, refuse
to do so? Did you fell any consequences? I would rather refuse to pay for a bribe even if I had the
potential to ask for it because I do not want to be corrupt and also I do not want to have my own
profit if it is not came from good acts. Being corrupt could not help us to the development and
improvement of our country but it could hurts and affects everybody the most.
8. What are some of the means by which corruption could be reduced in if not totally eliminated in
the Philippines?
- Corruption always occurs in the Philippines because of the individuals who are willing to do
elicit acts. Most of the people in the government are there to find ways to line their pockets
through unethical means. Because of this, corruption is just so blatant and in-your-face that is no
very difficult for a corruption scandal to cause outrage. One of the ways to stop corruption in the
Philippines is that we need to discipline ourselves first. Because if we are ell disciplined, we can
learn to be a better persons. We should also learn to elect the right politician that we think that is
not corrupt and could make our country even better, so we must discipline ourselves to elect ell
disciplined persons to reduce and stop the corruption in our country that could help to the
improvement and development of our country Philippines.
 CHAPTER 10: RISK MANAGEMENT
Learning Activity 10
Answer the following:
1. What is “Risk Management”?
- Risk Management is about how you manage and assess the risk and taking precautionary steps
to reduce the risk. Risk Management is the process of making decisions that will minimize the
adverse effects of risk on an organization.
2. What are the basic approach in management risks?
- Top down-approach
- Bottom-up approach
-Mixed approach
3. How does ISO 31000 define “Risk Management”?
- Is the identification, assessment, and prioritization of risks followed by the coordinated and
economical application of resources to minimize, monitor and control the probability and/or the
impact or unfortunate events and maximize the realization of opportunities?
4. What are the basic principles of risk management?
- Risk Management should:
1. Create value – resources spent to mitigate risk should be less than the consequence of
inaction, i.e., the benefits should exceed the costs
2. Address uncertainty and assumptions
3. Be an integral part of the organizational processes and decision-making
4. Be dynamic, iterative, transparent, tailor able, and responsive to change
5. Create capability of continual improvement and enhancement considering the best available
information and human factors
6. Just be systematic, structured and continually or periodically reassessed
5. Enumerate the steps in the ISO 31000 risk management process?
- Establishing the Context
- Identifying of Potential Risks
- Risk Assessment
6. What are elements of the risk management process?
- Identification, characterization, and assessment of threats
- Assessment of the vulnerability of critical assets to specific threats
- Determination of the risk
- Identification of ways to reduce those risk
- Prioritization or risk reduction measures based on a strategy.
7. What are the key elements that the company-wide risk management should process?
- For the most part, the performance of assessment method should consist of the following
elements:
1. Identification, characterization, and assessment of threats.
2. Assessment of the vulnerability of critical assets to specific threats.
3. Determination of the risk (i.e the expected likelihood and consequences of the specific types
of attacks on specifics assets).
4. Identification of ways to reduce those risks.
5. Prioritization of risk reduction measures based on a strategy.