What is the purpose of the code of ethics in organizations?

• A. Serves as a formal statement of values with no enforcement mechanisms.
• B. Sets expected behavior, promotes integrity, and provides a basis for disciplinary action.
• C. Replaces the need for internal audits.
• D. Only communicates legal compliance to customers.

Answer: (B)

A code of ethics defines how people are expected to behave and makes those expectations explicit, tying daily actions to the organization’s values. It guides decision-making in situations where dilemmas arise, promoting integrity and establishing trust with colleagues, customers, and the public. Because it specifies consequences for violations, it also provides a clear basis for disciplinary action, helping ensure accountability across all levels of the organization. It’s not merely ceremonial or symbolic with no teeth, and it doesn’t serve to replace internal audits or solely communicate legal compliance to customers. While it may reference legal requirements, the code primarily sets ethical standards that shape behavior and outline responses to misconduct.