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Are ethics too expensive?

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Also, 46 percent of executives expect fraud levels in their organizations to increase this year, according to a Compliance Week/Deloitte survey of 249 public company executives in December. Only 3.6 percent expected it to go down.

Even regulators are worried. In a rare bit of budgeting advice, the Securities and Exchange Commission in December warned firms not to make short shrift of compliance programs, which often include ethics training, when cutting expenses. Last month, panelists at a Washington, D.C., conference coached international business leaders on how to manage an effective compliance program in a resource-constrained environment.

Companies, in other words, are trying to pursue ethics on the cheap.

The Ethics & Compliance Officer Association says that at least six of its member firms have recently cut ethics budgets, and at least two others have consolidated their ethics and compliance programs. ECOA declined to name the companies. And firms making such cuts don’t exactly trumpet the fact.

The question is: Is cut-rate ethics really feasible?

“The main thing that [clients] say – and this may be optimistic – is that they’re deferring,” says Steve Priest, president of Ethical Leadership Group, a consulting firm in Wilmette, Ill. “They’re saying, ‘This is not the year we can do assessments, do training, or engage managers’ ” in ethics initiatives.

One possible solution: Make the ethics arena more efficient.

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