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Costco Ethics Essay

Costco wholesale follows a very strict code of ethics, which are strongly enforced with their compliance program. Costco’s ultimate mission is to provide their members with quality goods and services at the lowest price possible. In order for Costco to achieve their mission, they must abide by their simple code of ethics which consist of, obeying the law, taking care of their members, taking care of their employees, and respecting their suppliers. Upon success of these four codes, they have the ability to reward their shareholders, which is their ultimate goal.

In order for Costco to implement their code of ethics, they must follow an austere compliance program. Costco must first appoint or retain a Chief Compliance Officer who directly reports to the Nominating and Governance Committee of Costco’s Board of directors. The Nominating and Governance Committee is made up of several independent directors whom have the responsibility to develop ideas, and give recommendations to the board corporate governance guidelines.

In order for the Chief Compliance Officer to understand the whole process, and compliance program itself, he or she must retain their position for at least three years. Within these three years, he or she must report to the Governance Committee at least twice a year in regards to compliances issues, and the relay of information between the financial reporting department and the financial planning department. Also the Chief Compliance Officer must report to the independent accounting firm or law firm at least once a year.

The Chief Compliance Officer’s initial duty is to coordinate and oversee the following areas: to improve Costco’s already set compliance program, revising the Code of Ethics to make it easily understood for their employees, spreading the compliance and ethical standards to officers and employees, improving the employee training program, to look for and address unethical behavior, enhancing the “whistle blower” program for anonymous accusations, to check on senior executives to ensure their participation in the ethics and compliance program, and lastly to ultimately oversee internal investigations involving financial fraud.

To guarantee that information is properly shared between the internal departments responsible for Costco’s equity compensation program there is written procedures to be followed. The departments that are mainly responsible for following this procedure are the financial reporting department, and the financial planning department. These departments are mandated to meet for at least three years for quarterly meetings attended with the Chief Compliance Officer, the Chief Financial Officer, the Controller and the supervisors of both departments.


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