The King IV Report on Corporate Governance for South Africa describes the culture of an organisation as the way we do things around here, even when no one is watching. Ethics are described as doing what is good and right for the self and the other. Thus the ethical culture of an organisation will be reflected in decision-making, the conduct and the relationship between an organisation, its stakeholders and the broader society.

Currently, in South Africa, there is a big political drive towards a National Health Fund, which will provide primary health care to all citizens. Private-sector doctors and specialists will be contracted by the government to deliver specific services to all citizens. As a result of this drive, private hospitals are being established outside of the usual networks of hospitals and the investors are mainly private doctors and specialists as well as shareholders outside of the medical environment when the hospitals are listed on the JSE Limited Stock Exchange.

Hospital Legs and Arms (The Hospital) is a surgical hospital where all types of orthopaedic surgeries and aftercare are offered. You are the Chief Audit Executive (CAE) at the Hospital, and you obtained the following information relating to the code of ethics of the Hospital and other matters.

1. The executive management of the Hospital has just instituted a new code of ethics. During a recent management meeting, the chief executive officer (CAE) and the chairperson of the Board signed the code of ethics as evidence of their commitment. 2. During a meeting with the Director: Human Resources, you were informed of, and provided with copies of the remuneration policy that was recently updated.

3. Management in the Hospital meets monthly to discuss the progress on the implementation of the new computer system and employees are informed of new developments through a weekly management letter.

4. Confidential company information is stored off-site and can only be accessed by the chief operations officer (COO).

5. Staff performance is evaluated on a quarterly basis and performance targets are updated and adjusted accordingly

6. The Hospital has appointed a risk specialist who identifies and ranks the company risks and prepares a risk profile for each department. The risk profile is used in preparing the departmental business plans where resources are devoted to significant risk areas.

7. Employees at The Hospital are required to state on a quarterly basis that they understand and comply with The Hospital policies, procedures, and code of ethics.

8. The salary section and the section that appoints and terminates staff are not in the same department.

9. The finance department generates management reports on a weekly basis for the chief financial officer (CFO).

10.The board of directors have fired the CFO for non-compliance with the procurement policy.

11.Employees are empowered, when appropriate, to correct problems or implement improvements within their area of responsibility.

12.Management analyses the risks and potential benefits of ventures that they engage in.

REQUIRED

Explain what ethical leadership means by referring to the King IV Report on Governance for South Africa (King IV) and indicate what should be covered in a typical code of ethics.