Are you an honest person?
Can anyone ever fully say “yes” or “no” to that question? Most of us have been learning how to be honest since we were in grade school, but it’s not always easy to do in real life. The fact is, there are a lot of gray areas when it comes to ethics.
To give you insights into the value of honesty, we partnered with CPA Academy to bring you a webinar “Painless December Ethics CPE.” The webinar was hosted by Caleb Newquist, Gusto’s Editor-at-Large, and Greg Kyte, founder of Comedy CPE.
Greg Kyte is a unique voice in the world of accounting. He’s been a stand-up comedian for over a decade and has shared the stage with many notable comedians. In merging comedy with accounting, he captures his audience’s attention and helps them to laugh and learn at the same time. Greg is known for his witty and ironic insights that provide much-needed perspective on the industry.
In this article, you’ll learn about the nuances of honesty and dishonesty, how to assess your own level of sincerity, and why some people don’t know how to be honest.
What does honesty look like in real life?
Greg and Caleb started off their discussion by introducing language to describe the gray area of ethics. They urged their viewers not to think of honesty as black and white, as being totally truthful or entirely deceptive are extreme behaviors most people can’t relate to. Instead, they asked viewers to rate themselves on a scale ranging from generally honest to generally dishonest.
“What do you mean by generally honest? If you’re saying, ‘Are people perfectly honest?’ well, everybody would say no. But if we’re saying generally honest, [we’re looking at] how people [carry] themselves on a day-to-day basis?”
– Greg Kyte
People are complex. Ethics are complex. Limiting the way we see things to binary opposites of black and white doesn’t reflect reality. To demonstrate this point, Greg and Caleb brought up research that demonstrates how people lie an average of three times in a ten minutes conversation. Social scientists concluded that people regularly lie in order to appear more likable and competent.
While the numbers may seem startling, they make sense when you consider how white lies and stretching the truth are generally considered harmless. Additionally, people use dishonesty as a protective mechanism. For example, if someone asked another person a personal question that they didn’t feel comfortable answering, they might lie in their answer.
“[If I say that I’m] generally honest, [it doesn’t mean I’m perfect]. [It means that] when I look at myself in the mirror, and I think about myself, … I consider myself to be a generally honest person. And that’s how I run myself on a day-to-day basis.”
– Greg Kyte
In the world of accounting, unnecessary lying still happens frequently. Greg and Caleb pointed out that the majority of the trillions of dollars lost to fraud every year is made up of small-scale operations or everyday occurrences. The Association of Certified Fraud Examiners estimates that 3.7 trillion dollars are lost to fraud every year.
In other words, the majority of fraudsters commit small crimes, and they may be people you wouldn’t consider to be immoral. Since most people are at least somewhat dishonest, they can easily be swayed to commit crimes when under pressure such as debt, and they have the opportunity to commit fraud, such as having access to financial documents. At least, this is how the Association of Certified Fraud Examiners—developers of the Fraud Triangle theory—would see it.
According to this philosophy, financial pressure plus opportunity creates the conditions for people to commit fraud. Additionally, fraudsters may go to great lengths to rationalize their behavior. Let’s say a CPA with mounting debt via a recent divorce has access to his company’s financial documentation on a regular basis, and perhaps there is no oversight or checks and balances that would make theft visible. He has opportunity and pressure, so now he begins to rationalize manipulating the balance sheets—he reasons that he’ll just do it once, to pay off his debts, and anyway the company is doing well and won’t even notice it’s happening.
Small-scale financial crimes happen more regularly than most of us would like to believe.
How can you assess if you’re generally honest?
One of the best ways to assess for general honesty is to see which actions you take when you’re not being held accountable. Public accountability keeps people in check most of the time, such as when someone has to sign a document that they’ve filled out and attest to its truthfulness. So what happens when no one is looking?
Every day, we’re presented with opportunities to choose between right and wrong. Luckily, many of us will choose honesty most of the time. Common scenarios in which a person chooses honesty despite not having accountability include:
- Paying for a bus ticket even if no one is checking for it
- Telling a store clerk that they gave you too much change
- Contacting a person who left their laptop in a coffee shop
- Calling someone who dropped their wallet in a department store
Do you do the right thing, even if no one will know but you? Do you take the less truthful road if you won’t get caught? Greg shared how he assessed that he was a generally honest person by relating a story.
“I’m in the Burger King drive-through [and] the lady gives me too much change by $1, and reflexively I say, ‘Wait, you gave me too much change.’ And I give it back to her when clearly I could just be like, ‘Thanks’, and move on. … I felt like it was proof of my general honesty that my reflexive nature, without even thinking about it or contemplating what to do, was to give her the money back. That was proof [that I’m generally honest].”
– Greg Kyte
However, Caleb probed Greg further by asking what would happen if the scenario had been slightly different. He asked Greg what he’d do if he had gotten an accidental additional Whopper instead of too much change. Would Greg have returned it?
“If I [was] still at the window, looking into my bag, and I [saw] an extra Whopper there, I’d go, ‘Oh, hey. You gave me an extra Whopper,’ and hand it back to her. But if I’ve driven away, … there’s going to be an inconvenience factor, [which means] I’m not going to go back to give them this extra Whopper. If I’m already gone from the drive-through, then I’ll go, ‘Oh, your mistake.’ … I feel like I can rest because I can rationalize that.”
– Greg Kyte
Clearly, as details change, so can the assessment of what is right or wrong. Sometimes what is good or bad isn’t entirely clear.
The difference between a dishonest person and a pathological liar
It’s important to note that gray areas apply to the majority of people but not to pathological liars and the small percentage of the population without a conscience. Some of the most notable examples of these types of individuals include: Bernard Ebbers of WorldCom, Bernie Madoff of Ponzi Scheme fame, Jeff Skilling of Enron, and Dennis Kozlowski ex-CEO of Tyco. All four of these disgraced leaders shocked the world with their brazen burglary and their complete lack of remorse.
“There’s some interesting videos that you can find of [the Tyco guy, Kozlowski], where he’s actually talking about his fraud from his jail cell in prison. … That guy’s a piece of work … He’s still defending what he did. But if you look at how he took the money, and [abused his power and position] … it’s a little bit shocking. It leaves you with a bad [feeling].“
– Greg Kyte
While most of our fellow humans are generally honest or dishonest, some seem to have no moral compass at all. While that’s only a small percentage of the population, it’s enough to be statistically significant. Greg and Caleb revealed that 1% of the population are considered to be psychopaths.
“I’m going to assume that during the day just driving from here to my office, I’m going to pass more than a hundred people in cars driving. So, that means there’s a psychopath that I just passed in a car that could turn into a homicide machine. … The other thing that’s interesting about psychopaths is that a lot of times, they don’t know how to act ethically or even how to act socially. And so, they are students of other people’s behavior, and they will mimic behavior that they think is exemplary for whatever position that they’re in. So, it’s almost like they’re actors.”
– Greg Kyte
Above-average intelligence, superficial charm, limited to no empathy for others, and pathological lying characterize psychopaths. These traits can result in difficulty with the law, victimizing other people, and of course, fraud and embezzlement. For those who can’t really understand or who don’t care how their actions affect others, the potential for crime is practically limitless.
“There’s a lack of remorse in what they’re doing. They’re swinging for the fences. They don’t really care about the impact of their decisions on other people.”
– Greg Kyte
But are all psychopaths clearly criminal and easy to identify? Unfortunately not. Greg and Caleb pointed out that the prevalence of psychopathy increases greatly when sampling CEOs. While this is chilling, it does make sense. Psychopaths often possess some of the most desirable characteristics in a CEO, who is expected to be cunning and ruthless while hiding their intentions beneath a charming veneer.
Thankfully, most people we deal with on a daily basis aren’t psychopaths, and in some ways, it’s best not to dwell on those who are. Why? There’s not much we can do about them. Psychopaths are known to be resistant to change. That said, it’s important to be cautious with documents and passwords and keep an eye out for theft and antisocial behavior.
“Requiring [an] ethics CPE of a psychopath is not going to help change their behavior. It’s not going to do anything for them. So, psychopaths are kind of their own thing. Again, and if we look at the fraud triangle, the only way to stop a psychopath is really to make sure that you’re closing down the opportunity [to commit fraud].”
– Greg Kyte
When it comes to preventing a psychopath from committing fraud, removing the opportunity is the only sure way to stop them.
Learn more about honesty and dishonesty
In life, no one is ever perfectly honest or dishonest. People lie far more often than they would like to believe, and it’s better to assess your level of honesty on a spectrum of generally honest to generally dishonest. While it’s encouraging that we don’t need to expect perfection from ourselves, it’s also worth noting that it also makes us capable of crossing the line. Many financial crimes are committed on a small scale by people who don’t necessarily appear to be criminals.
There is so much more to learn about ethics in accounting, so be sure to check out our other articles based on the same episode: CPA Ethics & The Ultimatum Game, The Science of Moral Codes and AICPA Ethics, The Sunglass Experiment and How It Applies to CPE Fraud, What Is Ego Depletion and How to Replenish It as a CPA and How to Build an Ethical Culture at Your CPA Firm.
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