Yet paradoxically, there is no generally accepted understanding of what integrity means. At an individual level, it refers to a person's character and behaviour and is often associated with honesty, truthfulness and doing the right thing from the wider community perspective. When applied to an organisation, integrity usually refers to an organisation which is co-ordinated, inter-connected and robust. When used to describe an activity such as reporting, integrity is often associated with something which is free from error and uncorrupted. So integrity is a relative concept, dependent on context.
ICAEW's latest 'Information for better markets' publication, 'Reporting with integrity', draws on ideas from a variety of disciplines. Moreover, because this report sees reporting with integrity to be a joint endeavour by individuals, organisations and the accounting profession, the report explores 'integrity' within all those contexts.
Aspects of integrity
Based on modern moral philosophy in the English language, the report proposes that there are five key aspects of integrity:
- moral values - such as honesty;
- motives - such as a desires, interests and ideals;
- commitments - in thoughts, words and deeds;
- qualities - such as perseverance and courage; and
- achievements - even in the face of opposition.
Personal integrity
An individual of integrity is guided by moral values and motives which are translated into commitments. An individual's commitments in pursuit of doing the right thing from a wider community perspective is also likely to require personal qualities, including perseverance and courage, if they are to lead to the hard-won achievements expected of individuals of integrity.
Integrity is special because all its aspects need to be linked and aligned in a consistent manner to form the whole. But while this wholeness may be easy to express, it is difficult to put into practice since personal, social, organisational and environmental factors influence behaviour.
Integrity is not something that is generally self-assessed; it relies on the assessment of another person who may be influenced by their own beliefs and expectations of how a person of integrity ought to behave. The report proposes that a person of integrity will be likely to demonstrate the following seven behavioural characteristics:
- be honest and truthful;
- be fair;
- comply with laws;
- promote community interests;
- be open and adaptable;
- take corrective action; and
- show consistency.
There will always be ambiguity when evaluating whether or not an individual has integrity. For example, a person of integrity is usually described as one who is honest and truthful. But are there circumstances in which it is acceptable for a person of integrity to lie? Lying in a negotiation situation such as the purchase or sale of a house is not likely to be associated with the actions of a person of integrity.
However, lying may be more acceptable in extreme situations, for example when an individual may feel he/she has to lie to save the lives of others. Whilst still assessing such a person as having integrity because they are trying to do the right thing, one might hesitate whether to call them honest or dishonest.
Organisational integrity
Applying the five aspects of integrity and the seven behavioural characteristics to organisations is more difficult since an organisation is made up from a collection of individuals from different backgrounds, with different beliefs, values and motives, working in different departments, responsible for different goals, processes and activities. So, how does an organisation create a common link or glue between such individuals?
The ICAEW report proposes a robust framework that links individuals to a common view of the organisation's moral values, motives, commitments, qualities and achievements. This framework consists of five key drivers - leadership, strategy, policies, information and culture - which need to be interconnected, mutually reinforcing and effective throughout the organisation.
By way of example, leadership is of central importance. Leaders are in a prime position to instil integrity in an organisation by influencing the organisation's strategy, objectives, structure, policies, procedures, decision-making, communication and culture. They should also lead by example and demonstrate the behavioural characteristic associated with integrity such as honesty, truthfulness, fairness and compliance with laws.
Reporting with integrity
Promoting integrity in organisations is, therefore, a complex matter. And this complexity is increased further when looking at the promotion of integrity in an activity such as reporting, which involves a variety of individuals and organisations. Some of the individuals work for the reporting entity; others do not. The individuals and organisations have different objectives and responsibilities and may have varying levels of integrity.
The report suggests that an overall reporting process with the integrity to inspire confidence will be one seen to be honest and truthful, to be fair, to comply with laws, to promote community interests, to be open and adaptable, to take corrective action and to show consistency. Hence integrity in reporting needs to be underpinned by the five key aspects of integrity. But reporting with integrity also relies on the reporting entities, audit firms, professional bodies and other organisations takings steps to promote integrity through their leadership, strategy, policies, information and culture.
Steps to take now
Integrity is ultimately about behaviour; it is a practical matter not solely a matter of philosophical, academic or religious debate. You might like to:
- review your organisation's definition of integrity, usually formalised in a written code of conduct;
- evaluate the effectiveness of your organisational framework and mechanisms to promote integrity; and
- participate in the consultation process for this report.
Author: Anne Davis is ICAEW's ethics manager.
This article was published by the Finance and Management Faculty (Issue 145, June 2007)