Integrity is one of the most important character traits in professional conduct. And it is also one of the most misunderstood term. Many people think that integrity means strict confidentiality and strictly toeing the official or regulatory line on anything and everything.
In my opinion though, integrity is a character trait when a person stands for something right and just, even when the circumstances force or attract him to do something else. Having integrity means one has his own principles along with the general professional conduct principles set by various bodies, and the individual follows them regardless of the circumstances.
Integrity does not mean absolute confidentiality and rigidness. It allows for some leeway to take into consideration certain practical issues. So one must be truthful, honest, open and confirming to guidelines in order to be considered a person with integrity.
Harming someone else’s interest, deliberately manipulating the system or a situation for own benefit etc. comprises of the events when integrity is lost. And the consequences of loss of integrity can be very dangerous for the individual as well as for the society.
We have seen several scams and frauds, especially is business and corporates, which can harm not only a set of individuals but also the society at large.
California Society of CPAs Code of Professional Conduct defines integrity in a manner that to maintain public confidence, professional responsibilities should be perfumed with highest sense of righteousness (CalCPA).
It further goes on to say that public trust and service to the society at large should never be undermined for self interest and gain. It does not bind a person in strict principles but instead allows difference in opinion and inadvertent errors, but no deliberate act should sacrifice client interest.
AICPA definition of integrity outlines that the individual has to maintain public confidence and should carry out all professional responsibilities with highest sense of integrity. Further, it states that integrity is a basic element of professional conduct and the benchmark against which all business decisions should be tested (AICPA).
The definition further goes on to elaborate that integrity does not mean absolute lip-tightness, but being honest and candid without breaching client confidentiality. It also states that one must not use public trust for personal gains and be responsible to the clients as well as the society with respect to any business decision and professional conduct.
Finally, it states that integrity must be measured in terms of what is right and just. And absence of any standards or rules does not give anyone the right to violate basic principles of honesty and confidentiality (AICPA).
A very high profile case which happened recently and involved violation of principles of integrity and breach of trust is that of Rajat Gupta and Raj Rajaratnam, when Rajat Gupta was on the board of Goldman Sachs and passed on crucial information to Raj Rajaratnam, the founder of a hedge fund Galleon Group (Jackson, 2015).
Rajat Gupta was convicted of insider trading and passing on critical information about Goldman Sachs while he was on the Board of Directors. He passed on information regarding several investments by Goldman and also information about Warren Buffet investing in Goldman during the financial crisis.
Rajat Gupta was convicted of insider trading and market manipulation. In this case, he breached the integrity that comes with the position of being a Director on the Board. He misused the trust of shareholders as well as the management and that led him to pay hefty fine and is also serving two year jail term (Jackson, 2015).
References
CalCPA. Code of Professional Conduct. California Society of CPAs Code of Professional Conduct. Retrieved from http://www.calcpa.org/who-we-are/calcpa-factsheet/code-of-professional-conduct.
AICPA. (2014). AICPA Code of Professional Conduct. AICPA. Retrieved from http://www.aicpa.org/research/standards/codeofconduct/downloadabledocuments/2014december15contentasof2015april23codeofconduct.pdf.
Jackson, L. (2015). Supreme Court rejects Rajat Gupta's insider trading appeal. Reuters. Retrieved from http://www.reuters.com/article/us-usa-court-insidertrading-idUSKBN0NB1HD20150420.
