Auditing and ethics

Auditors face an implicit ethical dilemma in that they are paid by those whom they are charged with verifying. This puts auditors in a difficult position as they are expected to protect the public interest by pushing back against misstated financial reports while managing their commercial obligations to their clients. Additionally, the auditing profession is facing pressures that threaten its survival. This can provide an incentive for auditors to cut corners and behave unethically. In this chapter, we explore the role of ethics in the auditing profession. We begin by providing an overview of the expectations of ethical auditor conduct and the ethical context in which auditors operate. Second, we explore the threats to ethical auditor conduct. Third, we review extant literature on ethics in the auditing profession, organized around three ethical lenses: deontology, virtue ethics and consequentialism. We close by providing recommendations on how to overcome unethical auditor behavior and suggest future directions for research.