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The impact of auditors’ awareness of the profession’s reputation for independence on auditors’ ethical judgement

Damai Nasution (Department of Accounting Faculty of Economics and Business, Airlangga University, Surabaya, Indonesia)
Ralf Östermark (Department of Accounting, Åbo Akademi University, Turku, Finland)

Social Responsibility Journal

ISSN: 1747-1117

Publication date: 29 July 2019

Abstract

Purpose

The purpose of this paper is to develop and test the scale of auditors’ awareness of the profession’s reputation for independence, defined as the degree to which auditors recognise the importance of the reputation for independence and acknowledge the impact of their judgements and decisions on that reputation, and to provide preliminary evidence of an association between auditors’ awareness of the profession’s reputation and auditors’ ethical judgement.

Design/methodology/approach

A seven-item scale was developed to measure auditors’ awareness of the profession’s reputation for independence, and an auditing case was used to measure auditors’ ethical judgement. A survey questionnaire of practising auditors working in auditing firms in Indonesia provides data for testing the validity and reliability of the new scale and proposed hypothesis.

Findings

The findings show that the scale is unidimensional and has satisfied reliability and validity. Moreover, the preliminary evidence of a positive association between the new scale and auditors’ ethical judgement is provided.

Research limitations/implications

Further studies should test the validity and reliability of the scale of awareness of the profession’s reputation for independence with larger data and in different settings. Investigation of the antecedent factors of auditors’ awareness of the profession’s reputation for independence is suggested.

Originality/value

This paper develops a new measure, namely, the awareness of the profession’s reputation for independence. Preliminary evidence to establish an association between that awareness and auditor ethical judgement is provided.

Keywords

Acknowledgements

The authors thank Karin Jonnergård of Lund University and Ben Warming Rasmussen of the University of Southern Denmark for helpful comments. The authors also appreciate valuable comments from the two anonymous reviewers and Hasan Fauzi (Associate Editor). Damai Nasution acknowledges funding from the Faculty of Economics and Business, Universitas Airlangga.

Citation

Nasution, D. and Östermark, R. (2019), "The impact of auditors’ awareness of the profession’s reputation for independence on auditors’ ethical judgement", Social Responsibility Journal, Vol. 16 No. 8, pp. 1087-1105. https://doi.org/10.1108/SRJ-05-2018-0117

Publisher

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Emerald Publishing Limited

Copyright © 2019, Emerald Publishing Limited