Abstract
This study examines the factors influencing internal auditors’ ethical judgement. Specifically, this study examines the effect of organisational ethical culture, audit experience and ethics training on internal auditor’s ethical judgement in a bank in Malaysia. Using questionnaire survey on 162 internal auditors, this study shows that organisational ethical culture, audit experience and ethics training can influence the internal auditors’ ethical judgement. The findings in this study can assist the management team in executing effective control measures and procedures in achieving effective ethical judgment. This study can also assist in strengthening the governance structure to promote the importance of ethical judgement at all levels. In addition, this study adds values to the existing literature on the factors that can influence the internal auditors’ ethical judgement in the context of a financial institution.
Highlights
Corporate scandals continue to be as a major concern which resulted in severe financial and non-financial impacts
This study examines the effect of organisational ethical culture, audit experience and ethics training on internal auditor’s ethical judgement in a bank in Malaysia
Using questionnaire survey on 162 internal auditors, this study shows that organisational ethical culture, audit experience and ethics training can influence the internal auditors’ ethical judgement
Summary
Corporate scandals continue to be as a major concern which resulted in severe financial and non-financial impacts. One of the contributing factors to such concern is the failure of the internal auditors to fully comply with the requirements in the Code of Ethics when executing their professional roles and responsibilities (Darussamin et al, 2018). The high-profile corporate scandals on corruption and fraud cases implicate the internal auditors’ capabilities (Ghani et al, 2019). In Malaysia, the auditors of Transmile Group Berhad did not highlight the misstatements in the financial statements. These cases have drawn the attention and questionable of the professional practices since these affect the stakeholders of the companies (Ghani et al, 2019)
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