Abstract
This study examined auditors’ ethical judgments using two theoretical perspectives; (1) Moral intensity constructs of Jones’ (1991) Model and (2) Forsyth’s (1980) framework of individual ethical orientation. The importance of the moral issues and how they affected the auditors’ ethical judgments together with the influence of individual’s ethical orientation and the client importance is discussed. A research instrument consisted of two scenarios with different level of moral intensity issues and utilized a 12-item of moral intensity measurement and a Forsyth’s (1980) scale to measure ethical orientation along two dimensions, idealism and relativism. The client importance is manipulated in this between-subjects study. The results of 152 auditors’ found that the effects of the moral intensity construct and the client importance on auditors’ ethical judgments is different based on the issues intensity level of the scenarios. Whereas, both dimensions of the individual ethical orientation (idealism and relativism) are found significant in both of the scenarios tested. The limitations of the study and recommendation for future studies are also discussed.
Highlights
The failure of some large companies in the west (Enron, WorldCom and Lehman Brothers) as well as in Malaysia (Perwaja Steel Berhad, Transmile Group Berhad, PKFZ Berhad) without auditors warning raised serious questions concerning the ethicality of the auditors
This current study was intended to provide a better understanding regarding the effects of moral intensity construct, ethical orientation components and client importance on ethical judgments among the auditors
The auditors‟ perception for each of the moral intensity components appeared to vary between each scenarios and being influenced by the ethical issue presented to them
Summary
The failure of some large companies in the west (Enron, WorldCom and Lehman Brothers) as well as in Malaysia (Perwaja Steel Berhad, Transmile Group Berhad, PKFZ Berhad) without auditors warning raised serious questions concerning the ethicality of the auditors. In performing their duties, auditors are often faced with situation involving financial integrity their ethical considerations are often challenged. Auditors are often faced with situation involving financial integrity their ethical considerations are often challenged Their ethical judgments have to meet up with both ethical obligation (between auditors & public) and contractual obligation (between auditors & management), and this is where the auditors‟ conflict will arise (Westra, 1986). According to Jones (1991), the moral intensity of the issue captures the heightened feelings and emotions of a particular ethical conflict and there are certain properties within an ethical issue that make the issue more salient and vivid to the decision-maker
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