IDEAS home Printed from https://ideas.repec.org/p/hal/journl/hal-03538166.html
   My bibliography  Save this paper

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
    as

    Download full text from publisher

    File URL: https://hal.science/hal-03538166/document
    Download Restriction: no
    File URL: https://libkey.io/10.1108/IJOES-01-2021-0006?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    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.
    2. Halil Paino & Malcolm Smith & Zubaidah Ismail, 2012. "Auditor acceptance of dysfunctional behaviour," Journal of Applied Accounting Research, Emerald Group Publishing Limited, vol. 13(1), pages 37-55, May.
    3. Linda Thorne & Jon Hartwick, 2001. "The Directional Effects of Discussion on Auditors' Moral Reasoning," Contemporary Accounting Research, John Wiley & Sons, vol. 18(2), pages 337-361, June.
    4. Treviño, Linda Klebe & Butterfield, Kenneth D. & McCabe, Donald L., 1998. "The Ethical Context in Organizations: Influences on Employee Attitudes and Behaviors," Business Ethics Quarterly, Cambridge University Press, vol. 8(3), pages 447-476, July.
    5. Breda Sweeney & Don Arnold & Bernard Pierce, 2010. "The Impact of Perceived Ethical Culture of the Firm and Demographic Variables on Auditors’ Ethical Evaluation and Intention to Act Decisions," Journal of Business Ethics, Springer, vol. 93(4), pages 531-551, June.
    6. Razana Juhaida Johari & Zuraidah Mohd Sanusi & Arumega Zarefar, 2019. "Auditor¡¯s Ethical Judgments: The Influence of Moral Intensity, Ethical Orientation and Client Importance," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 10(3), pages 77-87, May.
    7. Suhaiza Ismail, 2014. "Effect of ethical ideologies on ethical judgment of future accountants: Malaysian evidence," Asian Review of Accounting, Emerald Group Publishing Limited, vol. 22(2), pages 145-158, July.
    8. Pedro Marques & José Azevedo-Pereira, 2009. "Ethical Ideology and Ethical Judgments in the Portuguese Accounting Profession," Journal of Business Ethics, Springer, vol. 86(2), pages 227-242, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    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.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Tabea Franziska Hirth-Goebel & Barbara E. Weißenberger, 2019. "Management accountants and ethical dilemmas: How to promote ethical intention?," Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, Springer, vol. 30(3), pages 287-322, October.
    2. Ahmed Musbah & Christopher J. Cowton & David Tyfa, 2016. "The Role of Individual Variables, Organizational Variables and Moral Intensity Dimensions in Libyan Management Accountants’ Ethical Decision Making," Journal of Business Ethics, Springer, vol. 134(3), pages 335-358, March.
    3. Donna Bobek & Amy Hageman & Robin Radtke, 2015. "The Influence of Roles and Organizational Fit on Accounting Professionals’ Perceptions of their Firms’ Ethical Environment," Journal of Business Ethics, Springer, vol. 126(1), pages 125-141, January.
    4. Juliana Toro-Arias & Pablo Ruiz-Palomino & María Pilar Rodríguez-Córdoba, 2022. "Measuring Ethical Organizational Culture: Validation of the Spanish Version of the Shortened Corporate Ethical Virtues Model," Journal of Business Ethics, Springer, vol. 176(3), pages 551-574, March.
    5. Raymond O. S. Zaal & Ronald J. M. Jeurissen & Edward A. G. Groenland, 2019. "Organizational Architecture, Ethical Culture, and Perceived Unethical Behavior Towards Customers: Evidence from Wholesale Banking," Journal of Business Ethics, Springer, vol. 158(3), pages 825-848, September.
    6. Sebastian Goebel & Barbara E. Weißenberger, 2017. "The Relationship Between Informal Controls, Ethical Work Climates, and Organizational Performance," Journal of Business Ethics, Springer, vol. 141(3), pages 505-528, March.
    7. Guillem C. Cabana & Muel Kaptein, 2021. "Team Ethical Cultures Within an Organization: A Differentiation Perspective on Their Existence and Relevance," Journal of Business Ethics, Springer, vol. 170(4), pages 761-780, May.
    8. E. Julie Hald & Alex Gillespie & Tom W. Reader, 2021. "Causal and Corrective Organisational Culture: A Systematic Review of Case Studies of Institutional Failure," Journal of Business Ethics, Springer, vol. 174(2), pages 457-483, November.
    9. Jan Svanberg & Peter Öhman, 2016. "The effects of time budget pressure, organisational-professional conflict, and organisational commitment on dysfunctional auditor behaviour," International Journal of Accounting, Auditing and Performance Evaluation, Inderscience Enterprises Ltd, vol. 12(2), pages 131-150.
    10. Sebastian Cortes-Mejia & Andres Felipe Cortes & Pol Herrmann, 2022. "Sharing Strategic Decisions: CEO Humility, TMT Decentralization, and Ethical Culture," Journal of Business Ethics, Springer, vol. 178(1), pages 241-260, June.
    11. Tamara Poje & Maja Zaman Groff, 2022. "Mapping Ethics Education in Accounting Research: A Bibliometric Analysis," Journal of Business Ethics, Springer, vol. 179(2), pages 451-472, August.
    12. Lumina Albert & Scott Reynolds & Bulent Turan, 2015. "Turning Inward or Focusing Out? Navigating Theories of Interpersonal and Ethical Cognitions to Understand Ethical Decision-Making," Journal of Business Ethics, Springer, vol. 130(2), pages 467-484, August.
    13. Wen-yeh Huang, 2018. "Influence of Transparency on Employees’ Ethical Judgments: A Case of Russia," Journal of Business Ethics, Springer, vol. 152(4), pages 1177-1189, November.
    14. Hald, Julie & Gillespie, Alex & Reader, Tom W., 2021. "Causal and corrective organisational culture: a systematic review of case studies of institutional failure," LSE Research Online Documents on Economics 106537, London School of Economics and Political Science, LSE Library.
    15. Espinosa-Pike, Marcela & Barrainkua, Itsaso, 2016. "An exploratory study of the pressures and ethical dilemmas in the audit conflict," Revista de Contabilidad - Spanish Accounting Review, Elsevier, vol. 19(1), pages 10-20.
    16. Rafael Morales-Sánchez & Manuel Orta-Pérez & M. Ángeles Rodríguez-Serrano, 2020. "The Benefits of Auditors’ Sustained Ethical Behavior: Increased Trust and Reduced Costs," Journal of Business Ethics, Springer, vol. 166(2), pages 441-459, October.
    17. Mouna Hazgui & Marion Brivot, 2022. "Debating Ethics or Risks? An Exploratory Study of Audit Partners’ Peer Consultations About Ethics," Journal of Business Ethics, Springer, vol. 175(4), pages 741-758, February.
    18. Barbara Arel & Cathy Beaudoin & Anna Cianci, 2012. "The Impact of Ethical Leadership, the Internal Audit Function, and Moral Intensity on a Financial Reporting Decision," Journal of Business Ethics, Springer, vol. 109(3), pages 351-366, September.
    19. Jana L. Craft, 2018. "Common Thread: The Impact of Mission on Ethical Business Culture. A Case Study," Journal of Business Ethics, Springer, vol. 149(1), pages 127-145, April.
    20. Jana Craft, 2013. "A Review of the Empirical Ethical Decision-Making Literature: 2004–2011," Journal of Business Ethics, Springer, vol. 117(2), pages 221-259, October.

    More about this item

    Keywords

    Ethical sensitivity; ethical culture; ethical orientation; locus of control; audit; fiduciary services; Malaysia;
    All these keywords.

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hal:journl:hal-03538166. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.