Fin 370 - Walmart Ethics and Compliance

Walmart Ethics and Compliance Paper

Michelle Jones

FIN/370

July 8, 2010

Introduction

Wal-Mart started as a single store in 1962 and since then has expanded to over 3,600 stores in the United States and operates in 15 international markets. In this paper, we will discuss the role of ethics and compliance in the Wal-Mart organization and how it relates to its financial environment. We will discuss the specific procedures and codes Walmart has in place to ensure ethical behavior and also identify and discuss how this organization utilizes these procedures in relation to compliance to SEC Regulations. In order to achieve this, annual report information for Wal-Mart will be used to evaluate the financial performance during the past two years to evaluate and calculate its financial ratios. Based on ratios, Walmart's trend and financial health will be discussed.

Ethics and Compliance

Like most organizations, the leaders and managers of Walmart fully recognize the importance of the role of ethics and compliance in their organization and take all the necessary steps to communicate this to its staff. The first step Walmart takes in ensuring this happens is by requesting that anyone within the organization holding a management position understand its "Statement of Ethics" and provides adequate on-going training on its Compliance and Ethics Codes. Wal-Mart also has in place a Related-Party Transaction Policy that applies to its senior officers and directors and requires material related-party transactions to be reviewed by the Audit Committee. Wal-Mart has a Statement of Ethics ("Statement") applicable to all its employees ranging from its most senior manager to the lowest level. This Statement stipulates that all employees display honesty and ethical conduct at all times, discloses conflicts of interest and strives to be in compliance with all governing laws (www.wikinvest.com). If one of its senior financial officers has a reporting obligation under any policy, it is mandated that such officer should immediately bring the matter to the attention o his or her immediate supervisor and Internal Audit Services or, if appropriate, the Audit Committee.

Statement of Ethics

Walmart has an ethics policy to guarantee an honest, fair, and legal corporation. Three basic beliefs of Walmart are to respect the individual, service the customer, and strive for excellence. In addition to the ethics statement and guiding principles, the Global Ethics Office attempts to promote ownership of Walmart's ethical culture to all stakeholders globally. The statement of ethics applies to employees and board of director members of Walmart Stores, Inc. and Walmart- controlled subsidiaries. Furthermore, any third parties such as law firms, suppliers, consultants, and contractors must comply with the ethics statement.

Walmart stores are in several countries. Laws and regulations that affect Walmart internationally increase and becomes more compound each year. Sometimes the statement of ethics is modified to conform to changes in rules and customs depending on the country. For example, in the event that the laws of two or more countries encounter a conflict, contacting the Global Ethics Office or an in-country ethics committee helps resolve the issue.

Ethic Opinions

At Walmart, there may be a situation where an associate is unsure if an ethics rule was violated. To be certain, a person should use the Open Door process or contact the Global Ethics Office for an opinion before addressing the issue himself. The Open Door Communication method is the most direct way to raise a concern to a manager. However, if that manager is involved in the ethics problem, the employee should contact the next level of management or the Global Ethics Office. The Global Ethics Office has a helpline available to associates daily. The helpline staff is not affiliated with Walmart and associate privacy will be respected to the fullest extent possible under the law. Walmart's has a strong ethics policy to build achievement for associates, international entities, and stakeholders.

Financial Investments

Walmart has the responsibility to their stakeholders to make decisions based on Walmart's interest. A conflict of interest happens when someone's judgment may be influenced by possibilities of personal benefit. In addition, employees are liable for ensuring personal financial activities do not go against their responsibilities for the company.

A financial conflict of interest occurs when a person's judgment may appear influenced by the opportunity of a personal financial gain. Examples of financial conflicts of interest are extensive financial interest in a competitor and exploiting confidential company information for personal gain. Walmart does not accept personal relationship with suppliers. This unethical manner would be perceived as an employee exerting a business influence.

Walmart Assets

The responsibility of Walmart to the shareholders is to use Walmart property and goods for the sole purpose of business and not personal gain. For example, an employee should not sell or trade any assets belonging to the business or shareholders. Walmart employees should protect property and products to prevent misuse or theft of these assets. Any violations of these ethical policies must be reported to management or the Global Ethics Office.

SEC Regulations

The purpose of the U.S Securities and Exchange Commission (SEC) is to protect investors, maintain fair, orderly, efficient markets,