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Investigating factors that influence Malaysian auditors’ ethical sensitivity

Author

Listed:
  • Razana Juhaida Johari

    (UiTM - Universiti Teknologi MARA [Shah Alam])

  • Md. Mahmudul Alam

    (UUM - Universiti Utara Malaysia)

  • Jamaliah Said

    (UiTM - Universiti Teknologi MARA [Shah Alam])

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.

Suggested Citation

  • Razana Juhaida Johari & Md. Mahmudul Alam & Jamaliah Said, 2021. "Investigating factors that influence Malaysian auditors’ ethical sensitivity," Post-Print hal-03538166, HAL.
    • Handle: RePEc:hal:journl:hal-03538166
    DOI: 10.1108/IJOES-01-2021-0006
    Note: View the original document on HAL open archive server: https://hal.science/hal-03538166
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    References listed on IDEAS

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    1. Beverley Jackling & Barry J. Cooper & Philomena Leung & Steven Dellaportas, 2007. "Professional accounting bodies' perceptions of ethical issues, causes of ethical failure and ethics education," Managerial Auditing Journal, Emerald Group Publishing, vol. 22(9), pages 928-944, October.
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    Cited by:

    1. Jean Damascene Mvunabandi & Haruna Maama, 2023. "The Impact of Ethics on the Audit Quality of Firms in Sub-Sahara Africa," International Journal of Economics and Financial Issues, Econjournals, vol. 13(5), pages 119-127, September.

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    More about this item

    Keywords

    Ethical sensitivity; ethical culture; ethical orientation; locus of control; audit; fiduciary services; Malaysia;
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