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The impact of codes of ethics and experience on auditor judgments

Author

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  • Gary Pflugrath
  • Nonna Martinov‐Bennie
  • Liang Chen

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.

Suggested Citation

  • Gary Pflugrath & Nonna Martinov‐Bennie & Liang Chen, 2007. "The impact of codes of ethics and experience on auditor judgments," Managerial Auditing Journal, Emerald Group Publishing Limited, vol. 22(6), pages 566-589, July.
    • Handle: RePEc:eme:majpps:02686900710759389
    DOI: 10.1108/02686900710759389
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    Citations

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    Cited by:

    1. Mariana Alice PREDA (SIMION) & Anda Ileana NECULA & Anca Daniela ?ENCHEA, 2022. "Moral And Social Responsibility - Essential Attributes Of The Financial Audit Profession," Contemporary Economy Journal, Constantin Brancoveanu University, vol. 7(3), pages 161-170.
    2. Munkaila Aminu & Bomi Cyril Nomlala & Kiran Baldavoo, 2024. "Examining Mandatory Audit Firm Rotation and Audit Quality in South Africa: Practitioner and Academic Perspectives," International Journal of Economics and Financial Issues, Econjournals, vol. 14(3), pages 40-47, May.
    3. Peipei Pan & Chris Patel, 2024. "Do Internal Auditors Make Consistent Ethical Judgments in English and Chinese in Reporting Wrongdoing?," Journal of Business Ethics, Springer, vol. 194(2), pages 433-453, October.
    4. Razan Nayef Almashaqbeh & Hashem Alshurafat & Hamzeh Al Amosh, 2023. "The Impact of Professionalism Theory Constructs on the Applicability of Forensic Accounting Services: Evidence from Jordan," IJFS, MDPI, vol. 11(4), pages 1-23, December.
    5. 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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