IDEAS home Printed from https://ideas.repec.org/p/osf/osfxxx/uypba_v1.html
   My bibliography  Save this paper

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_v1, Center for Open Science.
    • Handle: RePEc:osf:osfxxx:uypba_v1
    DOI: 10.31219/osf.io/uypba_v1
    as

    Download full text from publisher

    File URL: https://osf.io/download/61fa0b3fb63ee30ba9f35eb0/
    Download Restriction: no
    File URL: https://libkey.io/10.31219/osf.io/uypba_v1?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
    ---><---

    References listed on IDEAS

    as
    1. 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.
    2. 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 Limited, vol. 22(9), pages 928-944, October.
    3. Malcolm Smith & Normah Haji Omar & Syed Iskandar Zulkarnain Sayd Idris & Ithnahaini Baharuddin, 2005. "Auditors' perception of fraud risk indicators," Managerial Auditing Journal, Emerald Group Publishing Limited, vol. 20(1), pages 73-85, January.
    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. 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.
    6. Samuel Y.S. Chan & Philomena Leung, 2006. "The effects of accounting students' ethical reasoning and personal factors on their ethical sensitivity," Managerial Auditing Journal, Emerald Group Publishing Limited, vol. 21(4), pages 436-457, April.
    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.
    Full references (including those not matched with items on IDEAS)

    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. Razana Juhaida Johari & Md. Mahmudul Alam & Jamaliah Said, 2021. "Investigating factors that influence Malaysian auditors’ ethical sensitivity," International Journal of Ethics and Systems, Emerald Group Publishing Limited, vol. 37(3), pages 406-421, June.
    2. Janie Bérubé & Yves Gendron, 2023. "Developing Ethical Sensitivity in Future Accounting Practitioners: The Case of a Dialogic Learning for Final-Year Undergraduates," Journal of Business Ethics, Springer, vol. 183(3), pages 763-781, March.
    3. Nurul Nazlia Jamil, 2020. "The Power of Political Connections: Review on the Impacts of Audit Committee and Corporate Governance," Journal of Public Administration and Governance, Macrothink Institute, vol. 10(1), pages 333347-3333, December.
    4. Buntoro Heri Prasetya & Yvone Agustine Sudibyo, 2021. "The influence of the ethic culture and intellectual capital on local government performance: Evidence from Indonesia," Technium Social Sciences Journal, Technium Science, vol. 19(1), pages 465-476, May.
    5. Markus Brunner & Andreas Ostermaier, 2019. "Peer Influence on Managerial Honesty: The Role of Transparency and Expectations," Journal of Business Ethics, Springer, vol. 154(1), pages 127-145, January.
    6. Shamas-ur-Rehman Toor & George Ofori, 2009. "Ethical Leadership: Examining the Relationships with Full Range Leadership Model, Employee Outcomes, and Organizational Culture," Journal of Business Ethics, Springer, vol. 90(4), pages 533-547, December.
    7. Brennan, Niamh & Kelly, John, 2007. "A study of whistleblowing among trainee auditors," The British Accounting Review, Elsevier, vol. 39(1), pages 61-87.
    8. Vig Silvija & Dumičić Ksenija & Klopotan Igor, 2017. "The Impact of Reputation on Corporate Financial Performance: Median Regression Approach," Business Systems Research, Sciendo, vol. 8(2), pages 40-58, September.
    9. Sean Valentine & Philip Varca & Lynn Godkin & Tim Barnett, 2010. "Positive Job Response and Ethical Job Performance," Journal of Business Ethics, Springer, vol. 91(2), pages 195-206, January.
    10. Chantal Mangion & Norbert Tabone & Peter J. Baldacchino & Simon Grima, 2021. "Audit Quality and Resilience beyond the Role Stress Model: A Maltese Perspective," International Journal of Finance, Insurance and Risk Management, International Journal of Finance, Insurance and Risk Management, vol. 11(3), pages 37-56.
    11. Ozgur Demirtas & A. Akdogan, 2015. "The Effect of Ethical Leadership Behavior on Ethical Climate, Turnover Intention, and Affective Commitment," Journal of Business Ethics, Springer, vol. 130(1), pages 59-67, August.
    12. 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.
    13. Maureen Ambrose & Anke Arnaud & Marshall Schminke, 2008. "Individual Moral Development and Ethical Climate: The Influence of Person–Organization Fit on Job Attitudes," Journal of Business Ethics, Springer, vol. 77(3), pages 323-333, February.
    14. 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.
    15. Manal Mohammed Hamoudah & Zaleha Othman & Rashidah Abdul Rahman & Nor Azila Mohd Noor & May Alamoudi, 2021. "Ethical Leadership, Ethical Climate and Integrity Violation: A Comparative Study in Saudi Arabia and Malaysia," Administrative Sciences, MDPI, vol. 11(2), pages 1-18, April.
    16. 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.
    17. Pekkan Nazmiye Ulku & Bicer Mehmet, 2022. "Ethical Climate’s Mediating Role on the Relationship Between Emotional Intelligence and Job Satisfaction," Journal of Management and Business Administration. Central Europe, Sciendo, vol. 30(1), pages 115-132, March.
    18. Barnett, Tim & Valentine, Sean, 2004. "Issue contingencies and marketers' recognition of ethical issues, ethical judgments and behavioral intentions," Journal of Business Research, Elsevier, vol. 57(4), pages 338-346, April.
    19. Guillermina Tormo-Carbó & Zeena Mardawi & Elies Seguí-Mas, 2024. "Should I Stay or Should I Go? Auditor Ethical Conflict and Turnover Intention," Journal of Business Ethics, Springer, vol. 194(2), pages 335-350, October.
    20. Nida Kamal & Hina Samdani & Amna Yameen, 2018. "Engaging Employees through Ethical Leadership," Global Social Sciences Review, Humanity Only, vol. 3(3), pages 300-316, September.

    More about this item

    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:osf:osfxxx:uypba_v1. 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: OSF (email available below). General contact details of provider: https://osf.io/preprints/ .

    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.