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Article
Publication date: 1 February 1994

Rocco R. Vanasco

Highlights similarities among the codes of ethics promulgated byprofessional societies in the United States such as The Institute ofInternal Auditors (IIA), the American…

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3487

Abstract

Highlights similarities among the codes of ethics promulgated by professional societies in the United States such as The Institute of Internal Auditors (IIA), the American Institute of Certified Public Accountants (AICPA), the Institute of Management Accountants (IMA), and the EDP Auditors Association (EDPAA). Takes the Code of Ethics of the Institute of Internal Auditors, an international professional association, as an example to demonstrate that most of the articles of professional codes do not reflect the cultural dimensions of Asian, European, and other countries. Since one single universal code of ethics may not meet the needs of an international group, international professional societies may wish to consider alternatives to incorporate in their codes of ethics, especially the cultural dimensions of other countries. Cultural differences often limit the effectiveness of a uniform international code of ethics because they create a lack of consensus within a profession as to what constitutes acceptable behaviour.

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Managerial Auditing Journal, vol. 9 no. 1
Type: Research Article
ISSN: 0268-6902

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Article
Publication date: 3 July 2007

Gary Pflugrath, Nonna Martinov‐Bennie and Liang Chen

The purpose of this study is to investigate the impact of the presence of a code of ethics on the quality of auditors' judgments, within the context of the new…

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11144

Abstract

Purpose

The purpose of this study is to investigate the impact of the presence of a code of ethics on the quality of auditors' judgments, within the context of the new International Standard on Quality Controls 1 (ISQC1).

Design/methodology/approach

A sample of 112 professional accountants and auditing students was employed to investigate the effect of the presence of a code of ethics (operationalised as the presence vs absence of an organisational code of conduct) on the quality of audit judgments, pertaining to an inventory writedown, using a 2 × 2 full factorial “between‐subjects” experimental design.

Findings

The results of this study indicate that the presence of a code of ethics has a positive impact on the quality of the judgments made by professional accountants, but not on students. This suggests that it is the code of ethics, in the context of greater general experience that leads to higher quality of judgments.

Practical implications

The results suggest that the requirements of ISQC1 are relevant to the quality control of accounting firms and have potential to positively impact the quality of audit performance.

Originality/value

This is the first paper to examine the impact of the presence of a code of ethics within an audit context. It is the first time that the interactive effects of the code of ethics and technical competency, which together form an integral part of standard‐setters' quality control standards, upon the quality of auditor judgments has been investigated.

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Managerial Auditing Journal, vol. 22 no. 6
Type: Research Article
ISSN: 0268-6902

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Article
Publication date: 1 December 1997

Janice E. Lawrence, CPA PhD, Michael K. Shaub and CPA PhD

Auditors' ethical orientation and reasoning influence their professional and ethical decisions, thus impacting users of financial statements. This study examines gender…

Abstract

Auditors' ethical orientation and reasoning influence their professional and ethical decisions, thus impacting users of financial statements. This study examines gender and career level influences on ethical orientation and reasoning and documents systematic differences across the accounting firm. Seniors were most likely to adopt the ethical views of relativism and situation ethics. Male managers and partners were conventional ethical reasoners who adopted society's view of ethical problems, with partners scoring highest on Stage 6 principled reasoning. Female managers were largely Stage 5 principled reasoners. The results emphasize the importance of developing richer descriptions of auditors' ethics before recommending changes in the profession.

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Managerial Finance, vol. 23 no. 12
Type: Research Article
ISSN: 0307-4358

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Book part
Publication date: 30 September 2019

Carolyn Conn, Linda Campbell and Cecily Raiborn

Currently, there is no formal recommended structure, particularly regarding the client’s ethics, for determining whether an external auditor should continue the business…

Abstract

Currently, there is no formal recommended structure, particularly regarding the client’s ethics, for determining whether an external auditor should continue the business relationship with an audit client. This statement is not meant as a criticism, but rather as the backdrop for proposing that (1) a structure is needed that will assist auditors in evaluating client ethics and (2) such a structure should be institutionalized as an integral part of the continuance decision. Auditors will never be able to guarantee that a client is ethical – even those clients with detailed codes of ethics – but auditors could benefit from a more comprehensive and established process to assess a client’s commitment to ethical behavior. This paper begins by discussing some of the psychological aspects of the audit client continuance decision. Then, reviews existing, professional guidance related to evaluating client ethics. This is followed by the authors’ baseline model and client ethics evaluation checklist designed to assist external auditors in institutionalizing the evaluation of client ethics as part of the continuance decision.

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Research on Professional Responsibility and Ethics in Accounting
Type: Book
ISBN: 978-1-78973-370-9

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Article
Publication date: 1 May 1993

Philip H. Siegel, John O'Shaughnessy, John R. Leavins and John T. Rigsby

By its nature, the capitalistic economic system has produced numerous ethical conflicts. The professions, as well as business in general, have been impacted by the…

Abstract

By its nature, the capitalistic economic system has produced numerous ethical conflicts. The professions, as well as business in general, have been impacted by the increased emphasis on ethical behaviour. In the past few years, there has been an increased interest in business ethics. One profession which has especially grown due to the increased awareness of ethical issues is internal auditing. This has been in part due to the need for more reliable accounting records, tighter administrative controls, and improved operational efficiency. In order to provide some guidance to its members regarding ethical behaviour, the Institute of Internal Auditors has constructed a code of ethics. Describes how, through the use of a questionnaire, the views of practising internal auditors regarding the currently used code of ethics were obtained and analysed. The responses revealed that a substantial number of internal auditors do consult the code of ethics for guidance in making ethical decisions. A majority of the auditors believe that the code of ethics could be more effective if better enforcement methods were put into effect. Most respondents also believe that the code is complete as it is currently written and does not need to be expanded.

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Managerial Auditing Journal, vol. 8 no. 5
Type: Research Article
ISSN: 0268-6902

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Article
Publication date: 22 March 2011

Seleshi Sisaye

There is limited research that utilizes the consequential‐conflictual (CC) approaches, which utilized radical orientation of double loop, second order and reorientation of…

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3405

Abstract

Purpose

There is limited research that utilizes the consequential‐conflictual (CC) approaches, which utilized radical orientation of double loop, second order and reorientation of organizational learning strategies. Both the functional‐institutional (FI) and CC approaches are integrated with the sustainability and ecological resources management literature. The aim of this paper is to fill this research gap.

Design/methodology/approach

The paper applies FI and CC sociological approaches.

Findings

This paper's contribution to the managerial auditing education literature is based on the proposition that ethics education can improve the moral and ethical reasoning of auditors, when the educational processes incorporate both the FI and CC sociological organizational learning strategies. The paper suggests that ethics education in auditing could benefit from experiential teaching methods utilized in allied applied disciplines of medicine, engineering, and educational psychology.

Research limitations/implications

Sociological approaches have been commonly applied in behavioral managerial accounting and control systems research. This paper extends the FI and CC framework to ethics education in managerial auditing research.

Practical implications

The subject of accounting ethics education is important to auditors. When accounting ethics education utilizes both the FI and CC teaching approaches, the managerial auditing education processes become interactive and cooperative by bringing experiential organizational experiences to the classroom.

Originality/value

Accounting ethics education is shaped by ecological and environmental sustainability concerns. Recently, business school interest and growth in sustainability management has contributed to the integration of ethics education in managerial auditing and accounting contexts, overcoming the shortcomings accounting programs experienced from stand‐alone ethics courses.

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Managerial Auditing Journal, vol. 26 no. 3
Type: Research Article
ISSN: 0268-6902

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Article
Publication date: 23 October 2020

Jamel Chouaibi and Abir Hichri

The purpose of this paper is to consist in examining the effect of the auditor’s behavioral and individual characteristics on the integrated reporting quality, in regard…

Abstract

Purpose

The purpose of this paper is to consist in examining the effect of the auditor’s behavioral and individual characteristics on the integrated reporting quality, in regard to a sample involving 130 European industrial companies, relevant to the year 2017.

Design/methodology/approach

The present study’s adopted methodology rests on the hypothetico-deductive approach. The relevant data applied are analyzed by means of multiple linear regression models.

Findings

The reached results prove to indicate well that both auditor specialization and auditor ethics factors appear to have a significantly positive effect on the integrated reporting quality. Noteworthy, also, is the fact that the audit firm size and auditor behavior have been discovered to have a positive and insignificant effect on the integrated reporting related quality.

Originality/value

Faced with the scarcity of studies linking the auditor characteristics and the integrated reporting quality, the present study is elaborated to provide some kind of modest contribution, whereby, the determinants of integrated reporting are distinguishably highlighted

Details

International Journal of Law and Management, vol. 63 no. 2
Type: Research Article
ISSN: 1754-243X

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Article
Publication date: 29 April 2021

Hoang To Loan Nguyen

Wisdom is considered as crucial in decision-making in both management and auditing practice. This research aims to investigate the concept of wisdom in auditing, thereby…

Abstract

Purpose

Wisdom is considered as crucial in decision-making in both management and auditing practice. This research aims to investigate the concept of wisdom in auditing, thereby empirically exploring the determinants of wisdom in audit decision-making and explaining inter-relations among these determinants.

Design/methodology/approach

This study employs grounded theory methodology that is based on in-depth interviews with twenty-seven practicing auditors who are audit partners, managers, seniors and assistants of auditing firms. Guided by the grounded theory, data collection and data analyses were conducted simultaneously to look into the new insights of the research phenomenon. The coding process was constantly compared until the research's theoretical saturation is reached after four rounds. At the end of the research process, the study conducted a survey to confirm the proposed framework as well as examine the inter-relationships between the defined determinants.

Findings

Results suggest developing a conceptual framework to interpret wisdom-based decision-making process in auditing. A wise process of audit decision-making is defined as an integrated exercise of multiple determinants including knowledge assimilation, judgmental ability and ethical orientation. The research also explains and examines the potential interrelationships among these determinants in the audit decision-making process.

Practical implications

Wisdom is a valuable tacit ability for all external auditors. The development of wise decision-making abilities of auditors should be considered an integral part of multiple virtues including knowledge and judgmental and ethical aspects.

Originality/value

The contributions of this study are original and significant because it proposes a new approach to explain for the audit decision-making process and enhances better understandings of the concept of wisdom in auditing practices and its roles in audit decision-making.

Details

Library Hi Tech, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0737-8831

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Article
Publication date: 15 June 2021

Nieves Carrera and Berend Van Der Kolk

The purpose of this paper is to examine how experience and gender relate to the auditors’ moral awareness.

Abstract

Purpose

The purpose of this paper is to examine how experience and gender relate to the auditors’ moral awareness.

Design/methodology/approach

Hypotheses are informed by a neurocognitive approach to ethical decision-making and tested using survey data from 191 auditors of a Big Four audit firm in The Netherlands.

Findings

The main findings indicate that more experienced auditors (i.e. those with more years of work experience, a higher rank and a higher age) show higher levels of moral awareness. This positive relationship is stronger for morally questionable situations related to accounting and auditing, compared to general business moral dilemmas. In addition, the results support the expectation that on average, female auditors have higher moral awareness than their male counterparts.

Originality/value

To the knowledge of the authors, this is the first study that considers a neurocognitive approach to inform hypotheses about the antecedents of auditors’ moral awareness. The findings suggest that the involvement of experienced auditors in ethical decision-making processes may be beneficial given their enhanced ability to identify ethically disputable situations as such. Furthermore, increasing the number of women in senior positions may positively affect ethical decision-making in audit firms. Finally, this paper presents directions for future research.

Details

Managerial Auditing Journal, vol. 36 no. 3
Type: Research Article
ISSN: 0268-6902

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Article
Publication date: 13 November 2017

Syamsuddin

The aim of this paper is to investigate the mediation effect of whistleblower in relationship between auditor’s ethic, auditor’s commitment and auditor’s independence to…

Abstract

Purpose

The aim of this paper is to investigate the mediation effect of whistleblower in relationship between auditor’s ethic, auditor’s commitment and auditor’s independence to audit quality – a survey on provincial audit boards in South, Central and West Sulawesi, Indonesia.

Design/methodology/approach

The population in this research were auditors of audit board, amounting to 249 people, distributed in three provinces, namely, South Sulawesi, Central Sulawesi and West Sulawesi, using purposive sampling. The method used for analyzing the data in this research is structural equation modeling with auxiliary program analysis of moment structural version 20.

Findings

The main finding of this research is that the whistleblower is not the mediation variable of the relationship between auditor’s ethic, auditor’s commitment and auditor’s independence to audit quality. However, it does not mean that auditors will be whistleblowers who will disclose all cases into the public domain. Facts on the field are that Badan Pemeriksa Keuangan Republik (BPK) or The Audit Board of the Republic of Indonesia auditors do not become whistleblowers due to unsupportive atmosphere and less response from superiors. The results support the agency theory. This research supports the agency theory because of the fact in the field that BPK auditors are not committed to be whistleblowers. Meanwhile, there is positive effect of commitment to audit quality. This research supports stewardship theory and setting theory, as BPK auditors are already committed to the organization and demonstrate high levels of participation in the organization and stronger willingness to keep working and contribute to achievement of better audit. The BPK auditors maintain their independence in the inspection, but for them to be whistleblowers to reveal findings to the public is not allowed by their superiors. The research results support the agency theory.

Research limitations/implications

Whistleblower needs special attention in BPK, as it is proven that whistleblowing system has not been implemented, and support is needed from superiors and the agencies concerned if one of the auditors in carrying out their auditing tasks turn out to be a whistleblower due to their conscience. Although whistleblower is not regulated in Inspection Standard Statement, Regulation No. 01 of 2007 on Standards of State Audit (SKPN) of BPK, BPK should accommodate the application of the whistleblowing system, such as that adopted by institutions under the Ministry of Finance (Tax Office); hence, the existence of independent auditor profession regains public trust, something that has been dropped for all this time due to many cases involving independent auditors in business sector or the government sector. The government should provide a strong legal protection to ensure the protection to whistleblowers, as the existing legislation is still general in characteristics, as outlined in Law No. 13 of 2006 on Protection of Witnesses and Victims. Furthermore, the researchers should use qualitative research to study the behavior of the government auditors; why some areas receive Wajar Tanpa Pengecualian (WTP) or unqualified opinion predicate but are coupled by a tremendous increase in corruption; and whether BPK auditors have become whistleblowers in disclosing the actual facts.

Practical implications

Whistleblower need special attention in BPK as it is proven that whistleblowing system has not been implemented, and support is needed from superiors and the agencies concerned if one of the auditors in carrying out their auditing tasks turn out to be a whistleblower due to their conscience. Although whistleblower is not regulated in Inspection Standard Statement, Regulation No. 01 of 2007 on Standards of State Audit (SKPN) of BPK, BPK should accommodate the application of the whistleblowing system, such as that adopted by institutions under the Ministry of Finance (Tax Office), hence the existence of independent auditor profession regain public trust, something that has been dropped for all this time due to many cases involving independent auditors in business sector or the government sector. The government should provide a strong legal protection to ensure the protection to whistleblowers, as the existing legislation is still general in characteristics, as outlined in Law No. 13 of 2006 on Protection of Witnesses and Victims. Furthermore, the researchers should use qualitative research to study the behavior of the government auditors; why some areas receive WTP predicate but are coupled by a tremendous increase in corruption; and whether BPK auditors have become whistleblowers in disclosing the actual facts.

Social implications

The government needs to provide a strong legal framework to ensure the protection of whistleblowers, because the existing legislation is still general as outlined in the Act – Act No. 13 of 2006 on the Protection of Witnesses and Victims.

Originality/value

The originality of this research is using the government whistleblower as the mediation variable in relationship between auditor’s ethics, auditor’s commitment and auditor’s independence on audit quality, with the object being auditor in South Sulawesi, Central Sulawesi and West Sulawesi, Indonesia.

Details

International Journal of Law and Management, vol. 59 no. 6
Type: Research Article
ISSN: 1754-243X

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