Group Ethics & CSR Strategy Report

December 19, 2014

Brock Andersen
Jessica DeMann
Tyler Hunt
Spencer Moeller
Anna Smith

*Note: Every member of our group worked on the paper and every member contributed in a
manner about equal to each other member. Our names listed above serve as our electronic
signatures certifying this.

Executive Summary
The company we have chosen to do our project on is EY formerly known as Ernst & Young. EY
is considered one of the Big Four accounting firms with offices in most major cities around the
world. They currently have around 190,000 employees and earned $27.4 billion last fiscal year.
As we have talked about in class, it is important for a firm to have core values that employees
can rely on. At EY they value: (1) People who demonstrate integrity, respect, and teaming. (2)
People with energy, enthusiasm and courage to lead. (3) People who build relationships based on
doing the right thing. (Weinberger, Mark A. "Our Values).
We have analyzed EYs employee ethics, corporate social responsibility, current ethical issues
and strategies and compared them with two of EYs direct competitors. We have found that EY
is an overall excellent ethical company with an inspiring culture. With a few recommendations
such as decreasing their carbon footprint and having employees directly sign their reports, EY
will become an even better example of their high standards displayed in their mission statement.

Table of Contents
Executive SummaryPage 3
CSR Strategy Report...Page 4
Corporate Social Responsibility.Page 4
Employee Ethics/....Page 4
Ethical Issues...Page 5
Employee Ethics Strategy...Page 5
Competitors Strategy.....Page 6
Recommendations...Page 7
Conclusion...Page 8
References...Page 8
Appendix.Page 9

CSR Strategy Report

Corporate Social Responsibility
As one of the largest accounting companies in the world they have an extensive corporate social
responsibility. They coordinate volunteer opportunities that make real use of employees unique
skills in order to have the greatest impact.
As part of their responsibility EY conducts a Global Fraud Survey to see where hundreds of
well-known companies are at with their ethics.
In public accounting there are many people who rely on financial statements in making financial
decisions. These can have great impacts on people lives and it is important that the information
provided to the public be accurate and never misleading. Of those who rely on the audited
financial statements are investors and creditors.
Deloitte focuses much of their efforts towards sustainability. They invest a considerable amount
of money into building greener facilities and processes. They work with the government and
other nonprofit organizations in order design and distribute effective solutions for the
environment. This is an excellent effort towards corporate social responsibility in that it makes a
difference for everyone. EY could definitely improve their social responsibility outside of their
immediate reign of control.
KPMG puts social responsibility as a top priority and includes it in their core values. They do a
lot of work similar to EY in that they use their core competencies to work towards social
responsibilities. They use their specialties to help push environmental movements through the
government. Similar to Deloitte, they also make changes in their own offices. They recently built
a new office in Hong Kong that completely embodies environmental sustainability, and also
make efforts to reduce their carbon footprint.
KPMG is definitely doing a better job at corporate social responsibility than Deloitte and EY.
They put a lot of effort toward it and it is reflected in the company culture. It is clearly a top
priority from looking at their website and learning what they have done in the past year.

Employee Ethics
EY has offices in nearly every major city in the world making it difficult to have a firm wide
standard of ethics. Much of their ethics is based on the individual employees having a high
standard of ethics. It was great to see by talking with some EY employees, their personal
standard of ethics. Their ethics were rooted not only from the companys standards, but also
dependent on their own beliefs and values.
The value of an accounting firm comes from their reputation of integrity. This is a high focus of
EY. They have a high standard in order to ensure that they are a reputable accounting firm. Their

ethical standards start at the top of management and goes down to every single employee. It is
important that all employees behave ethically in order to keep EY in the Big Four.
We sent a survey to several employees at EY about their experience with ethical decisions. The
survey was anonymous to help them feel free to share their experiences. All of them felt that EY
was a very ethical company. One Employee said, They are on par with the high ethical
standards required of a public accounting firm. Even those who have not been working at EY
for a long period of time have seen their leaders strive to promote ethics and independence in
various aspects of the audit. It is clear that high ethics are expected of all at the firm. This is
very reassuring to hear that even the newest employees know the high standard at EY.

Ethical Issues
Accountants are known to be masters of making the numbers work because accountants can
move numbers through the financial statements to be in their favor. By altering the financial
statements of a company an employee can effectively make a significant change in the value of a
company. Employees at EY work with some of the largest companies in the world and with
some collusion they could make disastrous decisions. For example, in 2001 one of the largest 5
accounting firms in the nation, known as Arthur Andersen, created one of the largest scandals in
American business. Arthur Andersen manipulated $100 billion in revenue from Enron by means
of institutional and systematic accounting fraud. EY could easily cause a similar scandal if they
were unethical, so employees must always do the right thing.
Small ethical decisions lead to bigger ones like we saw with Arthur Andersen. An EY auditor
said, I think the most common thing an auditor can do is "sweep something under the rug".
Finding errors or issues during the audit creates more work for us, so I can see how some may be
tempted to overlook something or take an additional sample to avoid a finding. I think the firm
does its best to help overcome this issue by stressing the importance of getting things right,
having high quality documentation, and stressing the importance of ethics. This quote is a great
example of the every day ethical decisions that a bottom level auditor will face. Another auditor
said, You can always expense more than you are supposed to and charge it to "MISC" so some
people could do that. An accountant should not put expenses into MISC because it makes it
extremely difficult for an analyst to see where the cash is going and coming from. EY employees
will always be faced with small decisions regarding accounting.

Employee Ethics Strategy

EYs slogan is to Build a better working world. They plan on doing this by committing to
deliver excellence and quality to all of their stakeholders. In their Global Code of Conduct
published to the world they said, Every day each one of us could be faced with challenging and
difficult choices; its simply a part of living and working in a demanding, complex and
increasingly globalized business environment. But its the integrity and professionalism that we
bring to these challenges that defines our reputation. (Weinberger, Mark A. "Our Values.")
In order to ensure that EY does more than just talk about ethics the government has placed
certain governing bodies in place. In 2002, the Sarbanes-Oxley Act created the PCAOB, which is
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in charge of overseeing audits of public companies to protect the public interest and investors.
Their goal is to enforce independent and accurate audit reports. The PCAOB selects certain
companies each year and double checks the work of the auditors, gives suggestions, and enforces
change. The Securities and Exchange Commission (SEC) is another governing body that
oversees the work done by the PCAOB.
EYs Global Code of Conduct is a document of EYs standards and values. They are able to use
this document as a base for their decisions everyday. This code of conduct is for all employees.
They are expected to understand it, and if they dont, there are employees available to help them.
This code addresses all types of behavior and they have divided it into five categories; working
with one another, working with clients and others, acting with professional integrity, maintaining
our objectivity and independence, and respecting intellectual capital (Weinberger). These
categories are a guide for all employees to know the ethical standards they are expected to
uphold at EY.
EY has an ethics hotline. This is available for employees to report any behavior that is not
congruent with the EY Global Code of Conduct. This hotline is answered by a third party,
EthicsPoint, who then directs the issue to an EY Quality and Risk Management personnel or an
internal legal counsel.
EYs Leaders help shape the ethical standards for the company. In our survey, we asked a few
employees what the leadership at EY does to encourage high ethical practices. They responded
very positively. They said the leaders at EY are ethical themselves and set the tone for the
company. They train employees on ethics and provide resources for ethical conduct. They make
sure that the policy is clear and understood. They also have newsletters to keep the company up
to date on everything that is going on. In addition to all of this they have frequent trainings and
online learning to ensure that the employees learn their ethical standard and keep progressing in
that direction.
One of the employees shared a great experience with us. He said, At an event they handed out
pro-LGBT pins. An important superior was extremely supportive of LGBT. Everyone had a pin
on when I came in. I was asked to put one on. I declined. It wasn't a big deal. After time, more
showed up that didn't take pin. This says a lot about EY as a company.

Competitors Strategy
EY competes with three other large accounting firms, together they are known as the Big 4. We
looked briefly at the ethical policies and strategies of two other firms within the Big 4, KPMG
and Deloitte.
KPMG values leading by example, working together, respecting the individual, and above all acting with integrity. Integrity underlies all the principles in their code. This reflects an idea that
we talked about in class regarding internal vs. external ethics. It seems that they have tried to
shift their culture to be more of an internal strategy, meaning each person needs to do what they
think is integritous. KPMG also provides an anonymous reporting system, easily accessed from

the Internet and over the phone to whistleblowers to report any unethical issue that an employee
or someone affiliated with the firm encounters.
Deloitte values personal integrity and public trust. They seem to try to tackle both sides of the
internal vs. external ethics strategies that we discussed in class. Approaching ethics from both
angles helps them to prevent problems in a comprehensive fashion. Like the other Big 4
accounting firms, they have a code of ethics, as well as a hotline and website that employees and
affiliated persons can access to report problems. They also have resources immediately available
when you join the firm to help you track whether you are complying with regulations. There are
multiple systems that are easily and quickly available to track your personal compliance with
regulations. This helps each employee keep their integrity and remain ethical, while showing the
public that Deloitte cares about them as well.
Each of the three firms discussed display similar strategies for managing ethics. All provide a
form of whistleblowing hotline in order to help facilitate anonymous reporting. EY does a good
job of regulating their ethics. They have an extensive code of conduct that all employees actually
study and know. They also have excellent leadership that inspires the rest of the employees as we
have seen from our interviews. Deloitte does a good job of looking at things from all angles that
EY could probably improve on. Also, KPMG uses integrity as a key word. This is probably
helpful in making employees feel more personally responsible and accountable for their ethical
actions.
It is difficult to say if one necessarily does a better job than another. Each of the firms discussed
take employee ethics very seriously as we could tell immediately from looking at eachs website.
All firms have similar goals with only slightly different strategies. All firms are successful in
their own way. All of the Big 4 accounting firms are very comparable.

Recommendations
We would suggest that EY partners not only sign off on audit reports with the firm name, but
that they also sign with their personal name. We believe this will cause them to take the accuracy
of the reports even more seriously since their name will be placed on the documents. This will
have high impact with no correlated drawbacks.
The key to highly ethical employees is to make them feel personally responsible and accountable
for their actions. By using their personal name when they sign off on reports, employees know
that any mistakes will be traced back to them personally. This will eliminate fraud by removing
the rationalization piece out of the fraud triangle.
EY definitely has a lot of improvement in corporate social responsibility. KPMG is an excellent
example in that they incorporate their skills in order to help social issues get passed through the
government, as well as incorporate changes directly to their facilities. We recommend that EY
put more of an effort into implementing greener offices. Simple things such as timed lighting,
LED light bulbs, and reducing waste. Creating a greener footprint is important for all companies
and EY definitely has a lot of room for improvement in this area.

Conclusion
Overall EY is an excellent company. They are recognized for high ethical standards and people
respect that. The strong leadership does a great job at inspiring other employees as well as
forming a great company culture. Ethics is valued at EY and they have created many tools to
make an ethical environment so possible.
There is room for improvement, but by implementing the few recommendations we have made,
EY will be an even better example of high ethical practices and corporate social responsibility.

References
Web Sources:
"Corporate Responsibility & Sustainability | Deloitte | About Corporate Responsibility &
Sustainability." Deloitte. DTTL, n.d. Web. 15 Dec. 2014.
<http://www2.deloitte.com/global/en/pages/about-deloitte/topics/corporateresponsibility-sustainability.html>.
"Ethics & Independence | Deloitte US | Personal Integrity, Public Trust." Deloitte United States.
DTTL, n.d. Web. 15 Dec. 2014. <http://www2.deloitte.com/us/en/pages/aboutdeloitte/articles/about-ethics-independence.html>.
"EY/Ethics-Hotline." http://www.ey.com/US/en/About-us/EY-Ethics-hotline - EY. N.p., n.d.
Web. 09 Dec. 2014.
"KPMG's Code of Conduct ." KPMG's Code of Conduct. KPMG, n.d. Web. 16 Dec. 2014.
<http://www.kpmg.com/us/en/about/pages/codeofconduct.aspx>.
Weinberger, Mark A. "Our Values." Global Code of Conduct (n.d.): n. pag. 2013.
http://www.ey.com/Publication/vwLUAssets/ErnstYoung_Global_Code_of_Conduct/$FILE/EY_Code_of_Conduct.pdf Web.
Yiu, Stephen. "Corporate Social Responsibility." KPMG. KPMG, n.d. Web. 15 Dec. 2014.
<http%3A%2F%2Fwww.kpmg.com%2Fcn%2Fen%2Fabout%2Fcorporate-socialresponsibility%2Fpages%2Fdefault.aspx>.

Appendix
Interviews:
**Qualtrics survey to 5-7 EY employees
How does EY compare to competing firms in ethical behavior?
Yes
They are on par with the high ethical standards required of a public accounting firm
I feel they are more ethical than their competitors
The same
It is hard for me to say, as I have not worked for another firm. However, I have seen EY
firm leaders strive to promote ethics and independence in various aspects of the audit. It
Is clear that high ethics are expected of all at the firm.
I believe that EY and its competitors strongly value ethical behavior; therefore, EY would
have similar standards for ethical behavior in comparison to competitors
What tools do you use to ensure high ethical standards?
Self Conscience
Government regulation, in-house checks and balances, firm policy and guidelines, ethics
awards
Training, culture and requiring all levels (manager, senior manager, etc.) to review all
work papers
Mentors, code of ethics/policy, own thoughts and feelings
Personally, the biggest tool I consider is just my personal honesty and conscience. I think
my personal definition of ethics has been shaped by my personal experiences, ethics
Classes throughout school, religious beliefs, examples of those I work with, and a desire
to do what is right. I think the most common thing an auditor can do is "sweep something
under the rug". Finding errors or issues during the audit creates more work for us, so I
can see how some may be tempted to overlook something or take an additional sample to
avoid a finding. I think the firm does its best to help overcome this issue by allows
stressing the importance of getting things right, having high quality documentation, and
stressing the importance of ethics. Code of Conduct; Independence trainings
What does the leadership at EY do to encourage high ethical practices?
The are ethical themselves
Set the tone, make sure firm policy is clear and understood
Trains employees on ethics and provides resources for ethical conduct, i.e. ethical
hotlines
Recruiting, requires CPA, newsletters, frequent trainings, frequent online learning
When you start at the firm there are required trainings on ethics and independence as well
as annual requirements to read and accept the EY Code of Conduct.
Tone at the top encourages strong ethical practices
Have you ever faced an ethical dilemma while working at EY? Please describe your experience.

You can always expense more than you are supposed to and charge it to "MISC" so some
people could do that.
Not yet, only been here a couple months.
No
At an event they handed out pro-LGBT pins. An important superior was extremely
supportive of LGBT. Everyone had a pin on when I came in. I was asked to put one on. I
declined. It wasn't a big deal. After time, more showed up that didn't take pin.
I can't think of a specific example in my year at the firm where I have faced an ethical
dilemma.
No

How would you explain EYs corporate social responsibility?

I think it is a HUGE focus. We are always looking for ways to reach out in the
community and make a better working world.
EY is responsible for the financial safety of the public, the security and welfare of
employees and the general public, responsibility to give back and support community
needs, and encourage employees to do the same.
EY's slogan is "Building a Better Working World", so besides auditing and providing
services to clients, they invest in helping to build small companies, enable minority
groups career growth and educating the raising generation
They are very active. Certain paid hours allotted to each employee each month to serve in
community of their choice. Company supports lots of charities and efforts.
Sustainability audits a business line.
EY does various things to promote social responsibility. Some specific examples I have
observed include: EY Connect day (paid day for all EY employees where we go out into
the community and do a service project), EY United Way Drive, Matching Donations to
institutes of higher learning.
EY participates in the United Way giving campaign. We donate to universities. We hold
a 'Connect Day' to give service to the community.

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