Investigating factors that influence Malaysian auditors’ ethical sensitivity

Razana Juhaida Johari, Md. Mahmudul Alam () and Jamaliah Said

International Journal of Ethics and Systems, 2021, vol. 37, issue 3, 406-421

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.

Keywords: Auditors; Ethical culture; Ethical orientation; Ethical sensitivity (search for similar items in EconPapers)
Date: 2021
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Related works:
Working Paper: Investigating factors that influence Malaysian auditors’ ethical sensitivity (2021)
Working Paper: Investigating Factors that Influence Malaysian Auditors’ Ethical Sensitivity (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:eme:ijoesp:ijoes-01-2021-0006

DOI: 10.1108/IJOES-01-2021-0006

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