A major financial services company has an official code of conduct for its managers. Each manager is given a copy of the code upon hiring and is expected to read and adhere to the code.

 The code describes the expected conduct of the managers and contains examples of acceptable and unacceptable behaviors according to the code. The company does not provide training relative to the code nor does it require managers to acknowledge in any way that they read, understand, and accept the code.

The company has procedures in place for managers to confidentially report any known or suspected instances of code violations directly to the firm's audit committee. Reported issues are investigated by senior members of the internal audit staff under the direction of the audit committee. The results of the investigations are reported to the audit committee and the appropriate level of management for immediate action. However, there is no mechanism to report on the actual action taken relative to the violations.

a. Identify two strengths and two weaknesses of the company's code of conduct and its application. Briefly justify your responses.

b. Based solely on its code of conduct and related policies, does the company have a strong or weak internal environment? Briefly explain your reasoning in answering the question.