An ethics self-exam: ethical compliance is not just an issue for external review; auditors must look inward to ensure their own integrity is not compromised

Internal Auditor, June, 2004 by Christopher Bauer

MOST INTERNAL AUDITORS recognize the importance of understanding and adhering to the ethical codes governing their profession as well as those pertaining to the organization they serve. Familiarity with established codes enables audit practitioners to maintain integrity in their work and promote an ethical environment within the organization.

Beyond following acknowledged rules and policies, however, auditors also need to self-monitor the non-governed behavior that can lead to workplace indiscretions. Ethics violations are often rooted in personal matters and have little or nothing to do with the perpetrator's knowledge of relevant ethics codes or level of professional competence. Instead, violations largely stem from conflicts between established ethical mandates and an individual's personal wishes or values.

Almost anyone, not just internal auditors, can benefit from taking a cold, hard look at his or her guiding values. Self-directed questions such as, "Do I really value honesty over all?" and "Do I place my own personal interests at the top of the list of priorities governing my business objectives?" can help auditors pinpoint their values and identify areas where their judgment might be most susceptible to compromise. This exercise serves as the cornerstone of a preventive maintenance approach to ethical practice.

AUDITING OUR OWN BEHAVIOR

Whether or not we are conscious of it, our behavior is governed entirely by our personal wishes and values. In other words, every choice we make is based on answering the question, "What is the most important thing for me to do right now?" Although this may seem obvious, few people take the time to consciously examine their values.

Experience tells auditors that any sign of a weak corporate ethical posture requires tighter control activities, risk assessment, monitoring, and thoroughness of both follow-up and review. The lack of an explicit, coherent organizational ethics program, for example, would be as blatant a red flag for audit problems as one might ever encounter. Yet, we are too often willing to allow ourselves to breach ethical principles in ways we would never dream of allowing our clients. For this reason, auditors' self-evaluations need to be every bit as thorough as their reviews of others.

Ramping up attention to accounting red flags in suspicious or investigative climates is perhaps second nature for most auditors. Screening for one's own personal ethics red flags, however, needs to be a focused, thorough, ongoing act of introspection regardless of the audit climate. Failing to do so represents a systematic reduction in our self-monitoring that can be an open invitation to cross ethical boundaries.

REASONS FOR UNETHICAL BEHAVIOR

The language those who breach ethical principles use to defend their wrongful behavior is often couched in professional jargon or legalese. However, when one examines the actual thinking behind an ethics lapse, the underpinnings of most violations fall within a short list of relatively benign or even positive-sounding personal wishes. That list essentially consists of the following few statements:

* "I just want to get ahead in life."

* "I just want more time for __________."

* "I just want to be liked/respected/left alone by ______________."

* "I just want to be a good breadwinner/employee/colleague/partner."

Most likely, few people would find fault with any of these statements, as each one sounds fairly reasonable. Most of us would have reason to worry if we didn't wish for some or all of the above. In the right context, each statement has the ability to motivate an individual in many more positive ways than negative. At the same time, however, these wishes can serve as a catalyst for unethical practices, and auditors should learn to spot any negative pressures resulting from them. For example, the desire to fulfill some of these ambitions could lead an auditor to practice outside his or her areas of competency, fail to respond to the inappropriate actions of others, or misrepresent him or herself in some way. Warning signs need to be caught as early as possible to ensure behavior is directed toward the appropriate side of ethical boundaries.

SPOTTING RED FLAGS

Maintaining ethical practices requires constant critical thinking about the motivation behind our decisions. Failing to remain conscious of our decision-making processes can result in blindly moving into unethical territory. For this reason, auditors should pay close attention to their own red flags for ethical violations.

The easiest red flags to spot are rationalizations created to justify our behavior. More specifically, we need to remain aware of the way in which we talk to ourselves about making questionable choices. Auditors should pay attention anytime they find themselves thinking the following:

* "This is such a small indiscretion; who will notice?"

* "This questionable act really won't hurt anybody."

* "I don't feel comfortable doing this, but if this is what it takes to get ahead (via money/work/promotion/prestige) I should probably do it."