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Fin 370 Ethics and Compliance Paper

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Ethics and Compliance Paper

FIN/370

Ethics and Compliance Paper

In today’s business world, all businesses, organizations, and corporations must conduct business with the utmost honesty and in an ethical manner. This paper has been designed to discuss the Walmart Corporation, its role of ethics and compliance, the procedures used to ensure ethical behavior, the processes Walmart uses to comply with SEC regulations, and a review of Walmart’s financial performance over the last two years.
Role of Ethics and Compliance of Walmart The Walmart Corporation prides itself on its ethics and compliances to standards and regulations. Walmart shares all of its strategies and performance ratings in its annual reports, news releases, public filings, conference calls, and Internet resources so that all information is readily available to the public and potential and current stockholders. In regard to financial ethics of Walmart, the requirements are that the Chief Executive Officer (CEO) and Senior Financial Officers (SFO) must supply fair, full, understandable, and timely release of financial rankings in the periodic reports, which the Securities and Exchange Commission (SEC) examines. The CEO and SFOs of Walmart are responsible for reporting information that there may be in regard to deficits in operations in specific or general areas that could have a negative impact on the accurate reporting of financial data. Fraud involving associates who may be acting unethically must be brought to the attention of the SFOs, CEO, and any other corporate managers so they follow appropriate disciplinary actions to resolve the issues. The CEO and SFOs of the Walmart Corporation strictly back the financial ethics of Walmart. Walmart is stringent on ensuring that all parties including law firms, suppliers, contractors, accountants, and consultants act ethically and follow the code of ethics of the Walmart Corporation. Walmart has a strong belief in the “open-door policy” and encourages employees and associates to feel comfortable speaking with managers about possible financial ethical issues that he or she may see within the organization. Walmart also has a Global Ethics Helpline available 24 hours a day for individuals to call to voice concerns or report incidents where the integrity and ethics of the organization are at risk. By allowing all employees in all levels to be involved and able to express concerns of compromised financial ethics, Walmart strengthens its mandate of following set ethical and moral values of the Corporation. The financial ethics of Walmart cannot only be at risk by outside forces but also by employee dishonesty. If an employee is ethically dishonest, his or her actions can certainly have a negative effect on the Corporation. Employee theft is the number one reason for dismissal from the workplace. When an employee steals from his or her employer, not only does the store take a loss; the organization, other employees, and consumers do, too. This is because Walmart has to raise prices on products to make up for loss because of financial ethic dishonesty. The Walmart Organization takes its ethical responsibilities in earnest and does not tolerate the violation of its ethical code of conduct.
Ethical Compliance Procedures Walmart prides itself on the diversity of the organization with a strong set of core values instilled in its culture. Three values Walmart lives by are respect for others, service to customers, and the pursuit of excellence. As a corporation employing more than two million people in 15 countries, Walmart has an unbelievable duty to uphold these values and ensure ethical behavior throughout the organization (Walmart, 2011). The task of ensuring the ethical behavior of millions of employees around the world is extremely challenging, but Walmart, like many other organizations, has assembled a code of ethics. Walmart’s code of ethics, otherwise known as the statement of ethics, is a 36-page document Walmart distributes to everyone upon hiring. The statement of ethics contains detailed definitions of the laws, policies, and principles mandatory for every Walmart employee to adhere to including the three core values mentioned earlier. Furthermore, in 2003, Walmart compiled a code of ethics solely for the chief executive officer and the rest of the senior management team to ensure ethical behavior throughout the company from a top-down standpoint (Walmart, 2011). Another significant way Walmart aspires to ensure ethical behavior is by the addition of a department called the Global Ethics Office. To help endorse the value of ethics to all Walmart’s global stakeholders The Global Ethics Office was established. The Global Ethics Office has a confidential, open-door policy for stakeholders to bring their ethical concerns, and they oversee any investigations initiated from those concerns. The Global Ethics Office is also responsible for the implementation and maintenance of Walmart’s code of ethics (Walmart, 2011). Walmart has also established an Ethical Standards Program. Because Walmart is such an enormous entity, Walmart manufactures and purchases some of their materials and supplies from companies around the world. The Ethical Standards Program was designed to promote positive working environments for all those laborers that Walmart does business with. The program has even developed a code of ethics for suppliers to demonstrate Walmart’s immense concern for ethical behavior (Walmart, 2011). Walmart’s SEC Compliance Process. Walmart is a well-established and successful corporation with hundreds of stores operating worldwide. Walmart employs 2.1 million associates worldwide, including approximately 1.4 million associates in the United States (U.S. Securities and Exchange Commission, 2011). This is one good reason Walmart needs to ensure proper processes in order for the organization to comply with the SEC regulations. The company is at stake and responsible for its business operations and its employees. The SEC is a federal agency that helps monitor and supervise the exchange of securities to protect all the investors against malpractice, for example insider trading. The Securities and Exchange Commission not only supervises the exchange of securities; it regulates the issues and transactions in securities while prosecuting all illegal stock manipulations. “The SEC is responsible for implementing a series of regulatory initiatives required under the Dodd-Frank Wall Street Reform and Consumer Protection Act” (U.S. Securities and Exchange Commission, 2011, para 1). Walmart has ensured that the entire corporation is run properly. Upon Team C’s review of the Walmart’s financial records, team C found that the company keeps proxy statements, definitive additional proxy soliciting materials (which allows Walmart to furnish their proxy materials over the Internet), and annual reports for security holders. Quarterly reports that provide a continuing view of the company’s financial position are also filed as well as a notice of exempt solicitation, reports of unscheduled material events or corporate events, and statements of changes in beneficial ownership of securities. The holder of records of shares of Walmart stores must attend the Annual Shareholder’s meeting. In this meeting, the Board requires everyone to cast his or her votes for or against the shareholders proposals. Walmart must take steps and follow guidelines to stay in compliance with SEC regulations. The regulations helps Walmart minimize conflict of interest that often arises in complex operations. Financial Performance of the Walmart Corporation. Walmart debt ratio is vital to their daily operation. Walmart wants to ensure that their percentage is low so they reduce the percentage of borrowed money from outside sources or other leveraging options. Using the ensuing ratio from the following formula, Walmart can project if this course of action is necessary. In 2010, Walmart’s total liabilities produced upward of 99 million dollars. Walmart’s total assets reported in at 107 million dollars. Debt ratio = [pic] 99,939.00/170,407.00 = .5864 or 59% In 2009, Walmart’s total liabilities equated to 98 million, whereas Walmart’s assets calculated equated to 163 million. 98,144/163,429 =.6005 or 60% In order for Walmart to generate enough internal cash, demonstrating a high return on their equity will accomplish that goal. Walmart must show higher returns as compared to those in the same market. Using the following formula, Walmart can determine if they are heading in the correct business course. Net Profit ÷ Average Shareholder Equity for Period In 2010, Walmart net profit equaled to 14 million dollars. The shareholders equity for the period came in at 70 million. (2010) 14,370,000/70,749 = 0.20311 Return on equity, or 20.3% In 2009 Walmart net profit came in at 13 million dollars. The shareholders equity for the period came in at 65 million. (2009) 13,381,000/65,285 = 204.962 Return on equity, or 20.4% Walmart’s receivables turnover and day’s receivable assess the organization’s management of Walmart’s accounts toward their credit. In 2010, Walmart’s sales were 405 million dollars compared to 2009, which reached 401 million. The higher Walmart’s turnover ratio stands, the more promise the organization shows on collecting its accounts receivable sooner. In 2010, Walmart income statement clearly demonstrates there collection process using the following calculation. Receivables Turnover = [pic] 405,046 ÷ 4,144 = 97.774 Days’ Receivables = [pic] 365 ÷ 97.74 = 3.73 Rounded out this averages Walmart collection days to $4 per day. In conclusion, Walmart continues to be a multi-billion dollar conglomerate with stores located worldwide, and the potential for growth of the Walmart is extremely likely. The Walmart Corporation has the highest dedication to ensuring that financial and ethical responsibilities are upheld. The Walmart Corporation is steadfast in following regulations and providing consistent and accurate reporting of financial events to its employees, consumers, shareholders, and investors. Upon review of the financial ethics and steady economic conditions of the Walmart Corporation, it is safe to conclude that Walmart is an organization that continues to prosper and will continue to do so for a long time to come.

References
U.S. Securities and Exchange Commission. (2011). SEC. Retrieved July 24, 2011, from http://www.sec.gov
Walmart. (2011). Corporate. Retrieved July 23, 2011, from http://investors.walmartstores.com

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