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The keys to integrity and a sense of well-being for accounting professionals.

Consider the following situation: As part of performing year-end audit duties for a large and respected business, you are examining the required information to evaluate the firm's environmental contingency note disclosure. You find a note scribbled in pencil at the bottom of a memo written two months ago to the general manager of the company's coal-cleaning plant. The body of the memo gives details on the increases in the cost of toxic waste disposals and was written by one of the plant's department supervisors. The note reads: "We've got to get these costs down or we won't meet budget. Can we mix more of these wastes with the shipments of refuse to our landfill? Nobody seems to notice these coal-cleaning fluids when we mix them in well. This will save us millions and might keep management off our back."

As it was written a couple of months ago, you have no way of knowing whether the idea was actually carried out. You also know that this client is a major source of revenue to the firm for both audit and tax services. In fact, one of the reasons you were hired was your knowledge of and experience in this industry. Investigating this memo and finding out that the firm did indeed illegally dump these waste chemicals--which you strongly suspect they did, given their current financial condition--would almost certainly mean having to sever ties with the client, potentially putting your own job in jeopardy. Clearly your independence, objectivity, and integrity are being put to the test.

Situations such as this, especially in this turbulent economic climate, can make it easy for anyone, including accounting professionals, to lose his bearings. A focus on professional survival and our own self-interest can get in the way of a sense of well-being. When this happens, we can feel lost, alone, and, perhaps, more likely to make inappropriate decisions. In most cases, maximizing our own self-interest, even framed as professional survival, does not achieve a sense of well-being. When this happens, we need to look deep inside and find our integrity. This article shows how finding, retrieving, and acting with integrity can help us find our sense of well-being and help us decide, "What will I do when a difficult situation arises?"

Integrity and the Accounting Professional

From an ethical perspective, integrity is defined as the adherence to moral and ethical principles. Integrity is a fundamental character trait that enables an accounting professional to withstand client, management, and competitive pressures that might otherwise lead to the subordination of judgment. Integrity requires accountability, an attribute with which all accounting professionals are familiar. Its presence gives an accountant the motivation and intent to act according to his own moral point of view. Having integrity means acting out of moral principle and doing what is right, even if there are negative consequences.

In contemplating an action, many of us are prone to ask, "What's in it for me?" There is a tendency to calculate every action with the belief that the intelligent way to live is to maximize self-interest. Certainly in the situation described above, the decision to ignore the memo and hope for the best could, at least in the short run, keep the accountant's job safe. Doing nothing would be an error of omission rather than an error of commission. However, this common thought process can be given a more positive frame of reference. We can look to our own idea of integrity and ask, "If I do the right thing in this situation by reporting the memo, what's in it for me?" The answer is: It can create a sense of well-being.

Finding a Sense of Well-being

The word "sense" represents a conscious and motivating awareness, for example, "She has a sense of purpose or character about her." The idea of sense also represents a discerning appreciation of a given situation and the sense (knowledge) to know what to do about it. Maintaining integrity is all about having the appropriate sense about something. It is more than what is traditionally referred to as common sense. It can allow us to make the right decision when our integrity, independence, and objectivity are in jeopardy of being violated. Maintaining our integrity can lead to a sense of well-being by allowing us to be in contact with the following senses.

A sense of agency. Accountants in public practice, industry, education, and government act as agents on behalf of myriad stakeholders. They hold dual citizenship in the firm/employer and society, Accounting attempts to quantify and explain the complex reality of business. In this sense, accountants are called on to "give an account." This is not always easy or straightforward, as accountants often have to face conflicts of trust and loyalties. Accounting professionals must take into account the legitimate concerns of all the stakeholders both inside and outside the organization. To give an account, there must be common norms, values, and beliefs. One norm of the accounting profession is that of integrity. Accountability and agency demand integrity. With respect to the situation described above, recognizing that the situation affects many more stakeholders than just yourself can help expand the frame of reference.

A sense of the appropriate. The accounting profession stands for certain values that it is committed to demonstrating for individual businesses and for the community at large. But an accounting professional's personal priorities may communicate a different set of values. There is a very subtle component of conduct by which a person communicates to others what she stands for. Sometimes, we have to sacrifice a portion of our own self-interest to do what is right. Acting with integrity demands understanding a sense of the appropriate. Clearly, pursuing the memo and its implications is appropriate. Doing so will allow you to communicate that you believe in honesty.

A sense of wholeness. The concept of wholeness implies connections. It is personal connections that bind together other people and our personal social roles. Integrity represents the integration of our roles and responsibilities and the virtues defined by them. In brief, integrity can be thought of as being made up of the following personal concepts:

* Skill: Things that we do well;

* Knowledge: What we know about a substantive area;

* Social role: How we project ourselves to others;

* Self-image: How we see ourselves; our internal identity or inner self;

* Traits: Enduring characteristics of our behavior; and

* Motives: Thoughts and preferences that direct our outward behavior.

Connecting to our integrity makes us feel a sense of wholeness rather than feelingc disconnected from ourselves and the community at large. As with a sense of agency, a sense of wholeness lets us see the bigger picture and make the right choice, that is, report the memo.

A sense of positive influence. We all possess the power of influence, sometimes in subtle ways and sometimes in significant ways. The influence we exert is achieved less by words and more by the way we really are. It is important for all of us to acknowledge that our attitudes form the climate others live in. Maintaining our integrity gives us an ability to influence others. In order to maintain credibility and integrity--and in this way be able to hold sway over the opinion of others--an accounting professional needs a good image built through consistently high ethical conduct. This is the only way to have a positive influence over others.

A sense of creativity. We are all born with a spark of creativity. For some, it burns brightly throughout their lives, while for others, it barely flickers. But a sense of creative thinking is critical for maintaining our integrity. Often, ethical dilemmas have no obvious solution, and creative approaches must be found. Accounting professionals must be able to think in a creative manner in order to resolve ethical situations. This type of thinking requires that an accounting professional retrieve knowledge from various aspects of his life to address the issues in question (i.e., to work from an integrated self). Creative thought requires personal integrity. Perhaps you can draw on personal role models and imagine what they would do in this situation. Thinking creatively in this case requires you to make the connections between the current stakeholders and future stakeholders and decide what is best for everyone concerned.

A sense of purpose. A strong precursor to a renewed sense of well-being is a sense of purpose. Accounting professionals need to know that what we do truly matters. It is the job of accountants to develop meaning from data. Virtually all business decision making, whether it be internal or external to the entity, relies on information and knowledge generated by accountants. In his book The Grace of Great Things: Creativity and lnnnovation (Houghton Mifflin, 1990), author Robert Grudin argues that integrity does not just mean making appropriate ethical decisions. Routine day-to-day actions and activities can also have a sense of integrity about them. Work itself may foster a sense of integrity. A by-product of work well done is a kind of integrity, a sense of wholeness in which worker, tools, techniques, and knowledge are linked together and mutually fulfilled. A job well done is work done with integrity. At the end of the day, following up on the memo can give a sense of accomplishment.

A sense of character. To paraphrase Martin Luther King, Jr.'s, famous line, it is important to judge and be judged by the "content of our character." Accounting professionals must cultivate their character in all their actions and beliefs. Integrity requires having definite standards, worthwhile aims, and the tenacity to choose what is right above all other considerations. It allows us to define for ourselves what we consider to be non-negotiable. This requires self-discipline rather than self-indulgence. Clarity of purpose and honesty in thinking are other important dimensions that lead to integrity in a person's character. Integrity need not be considered a burden or something that we are obligated to do. Rather, it should be viewed as the presence of our individual character and ability in whatever activity needs to be done. A person of integrity develops a precedent for personal excellence. Reporting an ethically troubling situation, regardless of the potential impact to yourself and the firm, will clearly demonstrate your character.

A sense of trust There is a saying in sports that goes, "Trust is a must or your game is a bust." Public trust is one of the financial market's major assets. Public financial information is only considered useful and trustworthy if the users trust the auditor's opinion and the CEO's and CFO's signature on the management certifications. As mentioned earlier, giving an account is what accounting professionals do. We serve the public interest, and the public gives us their trust. To feel a sense of being trusted is one of the most beneficial aspects of maintaining integrity. Fostering and maintaining our integrity is the only way for accounting professionals to develop and maintain the trust of all who come to rely on them. Reporting possible violations that are discovered is the best way to be viewed as trustworthy.

A sense of self. In order to have integrity, you must possess a strong sense of your own self, not just a reflection of the social situation. Integrity rests on neglecting the changing and conflicting opinions and influence of others and faithfully following what one believes to be standards that are worth following. All of us are concerned with our own self--this is normal and appropriate behavior. It has been said that we don't see things as they are; rather, we see things as we are. If true, then it is vital to be comfortable with who we are. We need to understand that we must govern ourselves. Maintaining our integrity allows us to be content with who we are and to present our best self to the world. Reporting potentially fraudulent situations allows us to be true to ourselves.

A sense of happiness. Integrity is essential to happiness. Aristotle's central ethical concept of an all-embracing happiness tells us that doing what we ought to do, fulfilling our responsibilities and obligations, is not counter but conducive to the good life, to becoming the sort of person we want to become. Our country's forefathers recognized the need for life, liberty, and the pursuit of happiness. Happiness does not have to be pursued; rather, it can be found ingrained in our own integrity. While reporting this situation may not seem like happiness in the more traditional sense, it does allow us a small sense of satisfaction that can, in the long run, make us happier with ourselves.

Putting It All Together

The various senses discussed above are just a sample of what might be involved in thinking about our individual sense of well-being and what could help in the decision about reporting the potential pollution violation. Regardless of what is included or not included in the list, there is a deep and very personal connection between our integrity and our sense of well-being. This connection requires conscious thought and continuous action. These connections and actions should become second nature to accountants. As agents of the marketplace, accountants have an obligation to maintain integrity. Connecting these senses and our personal integrity can bring a sense of renewal and thereby increase our sense of well-being. But making these connections should be considered more than just an obligation. With practice, the linkage between integrity and our sense of well-being should become a part of us, a reflex action done without any hesitation or confusion. Retrieving and maintaining our integrity can lead us back to a sense of well-being, which can then help us make the right ethical decisions that will aid the world at large.

Lawrence Metzger, MBA, PhD, CPA, CMA, CFM, is a professor of accounting at Loyola University Chicago.
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Title Annotation:ethics
Author:Metzger, Lawrence
Publication:The CPA Journal
Geographic Code:1USA
Date:Mar 1, 2011
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