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Reporting with Integrity

The Reporting with Integrity publication identified several questions for discussion and further research. Readers were invited to respond to any of the questions in the report and provide general comments on the publication by 30 November 2007. In addition, the ICAEW participated and organised a number of events to advance debate on the topic of integrity.

Reporting with Integrity

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Reporting with Integrity has attracted considerable interest from academics, standard setters, professional accountants in business and in practice. A summary of the feedback received from events, meetings and respondents to the consultation is set out below.

Behaving with integrity

The majority of respondents were supportive of the behavioural characteristics associated with integrity:

  • be honest and truthful
  • be fair
  • comply with laws
  • promote community interests
  • be open and adaptable
  • take corrective action
  • show consistency

Some respondents would like further clarification on “promoting the community interests”. Perhaps taking into account the interest of wider stakeholders may be more appropriate.

In addition, respondents suggested that it may be appropriate to associate the following behavioural characteristics with integrity:

• sound judgement
• responsibility
• high degree of self awareness and self-management

Most respondents believed that a person should demonstrate integrity in their personal, business and professional life. Integrity goes to the core of a person’s identity and as such cannot be compartmentalised.

It was suggested that it may be worth exploring further conflicts between integrity and other personal qualities such as persuasiveness.

General comments

Feedback on the publication was that it was a high quality report, well structured, thought-provoking and unique. It added depth to the topic of integrity by looking at different disciplines in philosophy, psychology and other areas and was a welcome addition to the debate on integrity.

Although debate and discussion on integrity was welcomed by the majority of respondents, some respondents were concerned that debating such topics may give rise to the unwarranted impression that there is a fundamental problem of integrity in markets. 

The nature of capital markets is such that there will always be incidences of wrong-doing. This does not suggest that there is a general problem of lack of integrity in capital markets, business and reporting.

There were some concerns about the length of the report. Some respondents suggested that shorter publications aimed at a narrower audience may be helpful. In particular, respondents were interested in exploring further the practical applications of this publication, such as how organisations effectively promote integrity.

Promoting integrity in organisations

Respondents found it helpful to think in terms of leadership, strategy, policies, information and culture when looking at how to promote organisational integrity.

Most respondents believed that leadership and culture are the more significant determinants of organisational behaviour. Examples of initiatives which were suggested as being effective for promoting integrity were appraisals, recognition and reward policies, employee feedback, corporate responsibility reports and creating a values based and/or coaching culture.

It was suggested that further practical work on how organisations promote integrity may be helpful.

Promoting integrity in reporting

Feedback in this area was more limited and varied. Some respondents were supportive of the suggestion that the integrity of reporting as a whole can be usefully debated and taken forward as a public policy issue. 

It was suggested that it may be helpful to encourage debate on this topic with the professional press and other disciplines e.g. interdisciplinary conferences which would involve not only accountants but also other professions, users of financial information and academics.

 However, it is important that by having such a debate, the wrong impressions are not created. As one respondent put it, there may be a danger that the public reaction will be “we always suspected that integrity was missing from reporting.”

A few respondents agreed with the suggestion that a reporting process with the integrity to inspire confidence needs to be honest and truthful, to be fair, to comply with laws, to promote community interest, to be open and adaptable, to take corrective action and to show consistency. However, as referred to above, further guidance on promoting community interests may be required.

Some respondents were not supportive of the need to do any further work in the area of reporting and integrity. Trying to define integrity across an activity such as reporting, in a way which encompasses individuals, organisations and processes may result in having a definition of integrity which means nothing or is so stretched that it encompasses everything.

Promoting integrity in the accounting profession

The majority of respondents agreed with the suggestion that integrity should have greater status in the profession’s code of ethics but were not supportive of having a fuller definition of integrity since it is subject to different interpretations as noted in 1. However, respondents were of the view that it may be helpful to have further guidance on integrity in the accounting profession’s code.

Another suggestion was to limit the definition of integrity to the moral content and explore further the definition of professional behaviour. Professional behaviour can be claimed to be the distinguishing mark of the accounting profession whereas integrity is something which is expected of everyone.

If it is accepted that leadership and culture are the most significant drivers of ethical behaviour within the profession, then the issue of promoting integrity is best addressed within firms rather than external professional requirements. 

The majority of respondents suggested that training would be the most effective way of promoting integrity in the profession. It was suggested that the ICAEW should engage with firms and their ethical training and development at all levels (pre-entry and CPD from newly-qualified to partner).

The importance of integrity

In general respondents agreed that integrity was important not only on its own right but also because it:

  • helps establish trust
  • underpins high quality information that people can rely on
  • enables markets to develop and allocate resources more efficiently
  • delivers values to individuals, organisations and nations by supporting the achievement of desired outcomes
  • inspires public policy responses when there is a loss of confidence in markets

In addition, respondents suggested that integrity was important for:

  • acting as a model to staff and colleagues
  • communication
  • the creation of sustainable, long-term wealth

Some respondents disagreed with the view that integrity was a necessary and/or or sufficient condition for trust to exist. Trust may be based on an intuitive or emotional judgement or common purpose without having sufficient information to make a judgement on integrity.

The report proposed that people of integrity enjoyed personal well-being. The majority of respondents disagreed with this view. People of integrity are not usually rewarded in organisations as evidenced by whistleblowers, who are often ostracised and put under huge personal pressure.

The meaning of integrity

There were mixed responses to the notion that integrity has five aspects:

  • moral values
  • motives
  • commitments
  • qualities
  • achievements

Some were of the view that including the five aspects of integrity would be more in line with public expectations of what integrity means. There was some debate about the inclusion of motives and commitments aspects of integrity.

If integrity is regarded as a virtue, motives will be moral and therefore there is no need to include motives as an aspect of integrity. With regard to commitments, a person of integrity may have to change a previously held viewpoint to which he/she was committed.

One respondent suggested adding judgement as an aspect of integrity since a person of integrity should have sound judgement.

Others believed that introducing the five aspects of integrity would be too complicated and would unintentionally undermine behaving with integrity. As currently defined in the IFAC and ICAEW Code of Ethics, it is obvious if someone has not acted in an honest and straightforward manner.

There was also some concern about the international applicability of the proposed concept of integrity. Integrity means different things in different cultures and countries. It would be interesting to better understand how different national contexts influence the notion of integrity. With increased globalisation, it seemed critical to some respondents that the term integrity is analysed from a global perspective.