Why integrity is important in accounting

These codes of conduct and rules are in addition to the accounting standards we have to follow. Integrity is what the public expects from the accounting profession to keep the engine of commerce running smoothly.

Like air, accounting ethics are most noticeable when absent. Integrity is also essential for building strong accounting firms and accounting teams. Some may leave public accounting altogether if they encounter a toxic work environment that lacks integrity.

Integrity in accounting is especially vital for small business owners, who may see accounting as a cost with only dubious benefits. So they may try to handle their bookkeeping themselves, or hire a low cost provider, who may or may not be competent.

Saving a few bucks now may cost more in the long run when you need a professional accountant to clean up the mess, or when the IRS audits your tax returns. Our investment markets and our entire financial system all depend on integrity, honesty and transparency in financial reporting.

Honesty means that the reporting of transactions reflects the total reality of what happened. When everyone follows the same accounting principles, stakeholders have greater faith that the story those financial statements tell is trustworthy. That story has to be consistent with all the other information that analysts sift through. Trustworthiness is a key indicator from the public that your integrity is intact. Sarbanes-Oxley was passed , ostensibly to prevent the kinds of financial shenanigans that led to the failures of Enron, WorldCom, Global Crossing, Tyco, and Arthur Andersen.

Unethical businesses are always finding ways to cook the books. Every accounting scandal begins with one or two people who decide that the short-term benefits of bending the rules far outweigh any possible long-term reputation damage. But so far, all of our laws about financial reporting, SEC regulations, and professional codes of ethics have proven less-than-effective in deterring bad actors. The best solution I can come up with is to model integrity aggressively so that it becomes the norm, not an exception.

Demonstrate integrity in all you do. Public accounting firms or private companies often develop a code of ethics or conduct for accountants. These ethics and conduct rules ensure all accountants act in a consistent manner. In the absence of specific rules or standards, accountants should review their actions to ensure they are following commonly accepted principles.

Objectivity and independence are important ethical values in the accounting profession. Accountants must remain free from conflicts of interest and other questionable business relationships when conducting accounting services. Failure to remain objective and independent may hamper an accountant's ability to provide an honest opinion about a company's financial information. Objectivity and independence are also important ethical values for auditors.

The accounting industry usually limits the number of services public accounting firms or individual certified public accountants CPA can offer clients. Honesty and trust are central to integrity, as is consistency. Here are examples of integrity in action so you can recognize this important character trait in employees and coworkers. Some common synonyms of integrity are honesty, honor, and probity.

People often define integrity as doing the right thing even when no one else is around. It is the ability to act with honesty and be consistent in whatever it is you are doing based on the particular moral value or belief compass you have. A person who lacks integrity will make decisions based on how it will make them look rather than how it will benefit others. They look at their actions as a performance to be rated for approval rather than a step toward doing the right thing for the community.

When faced with challenges that test your integrity, remember what motivated you in the first place, question your comfort level and reflect on how you want to be remembered.

Acting with integrity can be difficult yet rewarding. Lead for yourself, and shine a light on the path for others. A person can have integrity because they stick to their morals and accept the consequences, good or bad, for their actions. People demonstrate integrity all the time and all over the world.

Here are some tips you can use to maintain your own professional integrity and encourage an entire culture of ethical behavior in the workplace.