Knowledge of ethics, perceived ethical problems and ethical judgments

Abstract

Purpose

The paper aims to investigate: the influence of knowledge of ethics (KOE) on auditors' perceived ethical problems (PEB); the influence of PEB on ethical judgments (EJ); and the mediating impact of PEB that mediate the relationship between KOE and EJ.

Design/methodology/approach

A total of 940 questionnaires were distributed to auditors of audit firms in Malaysia and 250 auditors responded. However, only 224 questionnaires were usable. Data were analyzed using SPSS 16.0 and structural equation modeling (SEM) using AMOSS 16.0.

Findings

The results indicated that statistically significant relationships exist between KOE and PEB, PEB, and EJ. Additionally, PEB are found to mediate the relationship between KOE and EJ.

Practical implications

This paper provides important implication for audit firms to enhance sufficient knowledge of Malaysian Institute of Accountants (MIA)'s code of ethical principles among their members. Another implication is for professional bodies to design a complete and effective code of ethics, disseminate free information to members through web site and e‐notification and conduct professional development programs with the latest development on a regular basis.

Originality/value

The number of studies on the impact of PEB as a mediator that mediates the relationship between KOE and EJ is scarce. Therefore, this paper aims to fill this gap. The findings provide insights that it is imperative to emphasize the importance of KOE and PEB in enhancing auditors' EJ.

Citation

Zakaria, M., Haron, H. and Ismail, I. (2010), "Knowledge of ethics, perceived ethical problems and ethical judgments", Journal of Financial Reporting and Accounting, Vol. 8 No. 1, pp. 50-64. https://doi.org/10.1108/19852511011055934