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Investigating factors that influence Malaysian auditors’ ethical sensitivity

Razana Juhaida Johari (Faculty of Accountancy, Universiti Teknologi Mara, Shah Alam, Malaysia)
Md. Mahmudul Alam (School of Economics, Finance and Banking, College of Business, Universiti Utara Malaysia (UUM), Sintok, Malaysia)
Jamaliah Said (Accounting Research Institute, Universiti Teknologi MARA, Shah Alam, Malaysia)

International Journal of Ethics and Systems

ISSN: 2514-9369

Article publication date: 8 June 2021

Issue publication date: 16 July 2021

316

Abstract

Purpose

The primary role of auditors is to offer fiduciary services to society and users of financial reporting. With this role, users placed their trust and depend on the ability and judgement made by the auditors during their auditing works. However, recent financial scandals involving high profile companies frustrated the public’s expectations, particularly in Malaysia. It is claimed that auditors are not having ethical sensitivity while executing their task in mitigating fraudulent financial reporting. Therefore, this study aims to examine the influences of ethical orientation, locus of control and the firm’s ethical culture on the auditors’ ethical sensitivity in Malaysia.

Design/methodology/approach

This study collected primary data based on a questionnaire survey among audit firms in the Klang Valley area and registered with Malaysian Institutes of Accountants.

Findings

The results showed ethical sensitivity has a significant negative relationship with relativism and in some cases has a significant positive relationship with idealism. Moreover, it found a significant positive relationship between ethical sensitivity and ethical culture.

Originality/value

This paper provides benefit to the audit firms, professional bodies, policymakers and academia in understanding the factors that might increase the sensitivity of auditors in dealing with ethical issues that could lead to fraudulent financial reporting in the company.

Keywords

Acknowledgements

The authors gratefully acknowledge the financial grant Accounting Research Institute (ARI), Universiti Teknologi MARA, Malaysia and Faculty of Accountancy for all supports and resources.

Citation

Johari, R.J., Alam, M.M. and Said, J. (2021), "Investigating factors that influence Malaysian auditors’ ethical sensitivity", International Journal of Ethics and Systems, Vol. 37 No. 3, pp. 406-421. https://doi.org/10.1108/IJOES-01-2021-0006

Publisher

:

Emerald Publishing Limited

Copyright © 2021, Emerald Publishing Limited

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