Investigating Factors that Influence Malaysian Auditors’ Ethical Sensitivity

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

No uypba, OSF Preprints from Center for Open Science

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.

Date: 2021-11-30
New Economics Papers: this item is included in nep-acc and nep-sea
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: 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:osf:osfxxx:uypba

DOI: 10.31219/osf.io/uypba

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