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Investigating Factors that Influence Malaysian Auditors’ Ethical Sensitivity

Author

Listed:
  • Johari, Razana Juhaida
  • Alam, Md. Mahmudul

    (Universiti Utara Malaysia)

  • Said, Jamaliah

Abstract

Purpose - The primary role of auditors is to offer fiduciary services to the society and users of the financial reporting. With this role, users placed their trust and dependent on the ability and judgment 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 the fraudulent financial reporting. Therefore, this study aims to examine the influences of ethical orientation, locus of control and firm’s ethical culture on the auditors’ ethical sensitivity in Malaysia. Methodology/approach - This study collected primary data based on a questionnaire survey among audit firms in Klang Valley area and registered with Malaysian Institutes of Accountants. Findings - The results showed ethical sensitivity has a significant negative relationship with relativism and some cases have 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, policy makers, 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

  • Johari, Razana Juhaida & Alam, Md. Mahmudul & Said, Jamaliah, 2021. "Investigating Factors that Influence Malaysian Auditors’ Ethical Sensitivity," OSF Preprints uypba, Center for Open Science.
    • Handle: RePEc:osf:osfxxx:uypba
    DOI: 10.31219/osf.io/uypba
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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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