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Looking at the present condition of corporate world there are several contemporary issues that businesses and societies are facing. Herein, considering the fact that businesses need to operate in systematic and reliable manner, top level management has to undertake various steps. For this, responsible management audit has been selected for the current case study. Top level management of business enterprise is responsible for ensuring that systems of internal control are in place, appropriate business practices are employed in the different areas of functioning, overall compliance is maintained and measured to identify frauds and risks so that they can be controlled and effective governance is established.
Looking at present conditions in the corporate world, it is important for the firms to manage and control their operations in an effective and competent manner so that desired results can be attained. Therefore, it is the duty of senior authority to carry out audit of the firm so that all the loopholes and gaps present in the functioning can be identified and potential measures can be implemented to mitigate that hindrance. Furthermore, through the means of responsible audit management researcher understand the responsibility of company towards four different aspects which are human rights, labour rights, environment and anti-corruption. Further,Nokian Tyres plc has been selected on the basis of which ten essential principal of responsible management audit that UN Global Compact listed Nokian Tyres plc has to undertake in order to carry out business functioning ethically.
In the present study, researcher focuses on understanding the responsibility of management regarding conducting the internal audit at constant basis so that different aspects of business can be managed and controlled in an effective way (Bertot, Jaegerand Grimes, 2010). Furthermore, Nokian Tyres plc has been selected for the research which is a global compact active firm operates in automobiles and parts sectors that is situated in Finland. Therefore, being the global compact active company, it is the responsibility of senior managers of the firm to comply the principles of UN Global Compact which consists of four different dimensions: Human and labour rights as well as environment and anti-corruption.
In this context, management is responsible for establishing and maintaining the control on environment within the organisation. However, there are several auditors who play a significant role in managing and controlling the internal functioning of business as well as making suitable recommendations for the betterment of business operations (Kim, Kim and Lee, 2009).
Along with this, every individual associated with the enterprise plays a significant role in either strengthening or weakening the company’s internal control system. Thus, it is important for all the employees to be aware of the concept and purpose of the internal controls so that they can mould their functioning accordingly and carry out the operations of Nokian Tyres plc in a reliable manner (Mosleyand Uno, 2007).
Nokian Tyres plc’s certain core objectives which are as follows:
Senior authority of Nokian Tyres plc is responsible for the internal control which consists of five critical components that are environment control, assessing the risks, potential control measures, information and communication as well as monitoring activities at each level. However, managers of the cited firm develop several policies and procedures under these components in order to achieve the above defined core objectives of Nokian Tyres plc.
The primary focus of internal auditing relates to the corporate governance which directly or indirectly helps the course of audit committee of the Board of Directors, Nokian Tyres plc to perform their duties and responsibilities effectively.
Nokian Tyres plc participates in United Nation Global Compact (UNGC) initiative that assists in developing the ten principles of responsible business conduct. Following are the four dimensions that cited firm has to comply:
Respecting human rights is essential but along with this, through the means of these principles, Nokian Tyres plc is encouraged to take actions in order to support human rights. Furthermore, it is the duty of senior authority of automobile company to make sure about those actions that are focused on involving human rights in its HR policies. Furthermore, special attention should be paid to the rights of vulnerable groups which consist of women, children, and people with disability as well as indigenous peoples, migrant workers, older persons etc.
Main purpose of complying human rights principles and legislations is that it assists in mitigating various risks and costs for the business. However, in case if companies are unable to follow the principles or do not respect human rights it may put company’s social license to operate at risk, reputational damage, consumer boycotts, exposure to legal liability and adverse government actions (The power of Principles, 2015). Furthermore, it may also lead to adverse actions by investors and other external business partners as well as reduced productivity and morale of the workforce.
It is the duty of senior authority of Nokian Tyres plc to make sure that they follow corporate policies which are related to the human rights. It should be particular to those rights which are strategically relevant to the functioning of business. There are two different ways through the means of which senior authority of Nokian Tyres plc can support and respect the human rights such as:
In the workplace:
In the community:
Respecting for human rights
By understanding the concepts of human rights it can be said that, sometimes it is challenging for a company to talk with its managers, employees and other stakeholders associated with Nokian Tyres plc. However, in order to respect human rights, it is important for the senior authority of cited organisation to promote understanding about the rights of human as well as their importance to the business activities (Korey, 2001). The main benefit of addressing different aspects related to the human rights is that, it helps in motivating managers and employees to deal with different risks and uncertainties associated with business and carry out functioning in the best possible manner. Other than this, Nokian Tyres plc can undertake effective and good human resources policies and practices against the discrimination along with promoting the diversity in the workforce.
Nokian Tyres plc is considered as the socially responsible employer. However, its code of business conduct clearly sets out the mandatory framework for human and ethic operating conditions. Top level management of company constantly focuses on ensuring a non-discriminatory, healthy and safe working environment (Douzinas, 2000). There are four major principles according to the Communication on Progress Report that cited firm has to follow in order to maintain the business standards.
The main purpose of following this principle is that:
Community of operations:
Cited firm should take aggressive steps to enhance the level in labour management relations, especially in those countries where legal framework is effective for the trade unions and for collective bargaining (McKinnon, 1988).
As per the rights, labour should be freely given and employees of Nokian Tyres plc should be free to leave as per the established rules and regulations (Van der Wiele and et.al, 2001). In context to Nokian Tyres plc, operating in legal manner does not encourage senior authority to practice forced labour as well as motivate them to enhance their knowledge related to different forms and causes of forced labour so that they avoid such situations within the firm or in the industry. There are several factors about which employee should be aware of such as:
However, association with child labour will likely to damage the reputation of Nokian Tyres plc (Korey, 2001). It is important for the senior authority to strictly comply the policies against the child labour so that brand image within the target market can be improved as well as their dignity can be maintained. Main purpose of following this principle for the Nokian Tyres plc is that:
In the workplace:
Discrimination can occur at the time of recruitment, remuneration, security of tenure, job prospects etc. Thus, it is the duty of senior authority of Nokian Tyres plc to make sure that they undertake appropriate legislations to eliminate the chances of discrimination so that social tensions can be avoided (Xie, DavidsonandDaDalt, 2003). Main purpose of complying this principle within the functioning is that:
In the workplace:
In the community of operation:
It helps in developing suitable climate which consists of tolerance and equal access of opportunities for the occupational development.
Nokian Tyres plc has the considerable expertise in offering quality of tyres for all the range of automobiles and it constantly focuses on bringing improvements to its products so that expectations of stakeholders can be met easily.
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When there is reasonable suspicion of harm, top level management of Nokian Tyres plc should apply precaution so that degree of uncertainty and risks can be managed and controlled (Korey, 2001). However, there are several companies active in the UN Global Compact employ this principle like Nokian Tyres plc because it assists in developing code of conduct for the operations.
Businesses should undertake initiatives to promote greater environmental responsibility
According to the Rio declaration, it is the duty of business enterprise to maintain clean and better environment (Rodríguez-Garavito, 2005). However, society expects from Nokian Tyres plc to good actors in the community so that better brand image can be created. Main purpose of promoting environmental responsibility for cited firm is that:
Businesses should encourage the development and diffusion of environmentally friendly technologies
As defined in Agenda 21 of the Rio Declaration, companies should undertake the technologies which are less polluting as well as make optimum utilisation of all the resources in a sustainable manner (he Ten Principles of the UN Global Compact, 2015). Main purpose of indulging this principle within the functioning of Nokian Tyres plc is that:
Nokian Tyres plc is committed to conduct its business as per the high ethical standards and in compliance with all the applicable laws (The power of Principles, 2015). However, cited firm is strongly dedicated in following the principles of good corporate governance that enhance culture.
Businesses should work against corruption in all its forms, including extortion and bribery
This is the tenth principle which was employed against the corruption in 2004 and commits UN Global Compact participants not only to avoid bribery but as well as extortion and the other forms of corruption. Furthermore, companies are forced to work collectively and join civil society. In order to avoid corruption, Nokian Tyres plc can undertake three elements of UN Global Compact:
In conclusion to the above report, it can be said that internal audit is one of the major aspects that top level management of an organisation has to carry out. Herein, Nokian Tyres plc management has been recommended 10 principles to improve their internal as well as external functioning so that better results and outcomes can be achieved.
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