Abstract
This article aims to test and provide empirical evidence of the moderated mediating role that plays moral identity in explaining auditor’s ethical decision making based on Jones' model of moral intensity. Therefore, this research proposes a moderated mediation model where moral identity accessibility mediates the relationship between perceived moral intensity and auditors’ moral judgment. Moreover, Moral identity centrality is tested as a moderator variable for this socio-cognitive model. This study used random sampling methods for external senior auditors operating in audit firms in Morocco. Data obtained by 125 respondents and processed with SmartPLS. The results show that the impact of an auditor’s perceived moral intensity on his moral judgment is fully mediated by moral identity accessibility and moderated by moral identity centrality. Auditor’s moral intensity perception seems to trigger the access to moral identity which in turn affects positively the moral judgment based on how central is moral identity to the individual.
Highlights
Recent economic and financial scandals such as Wirecard- Ernst & Young and the Anderson-Enron affair have raised many questions about the effectiveness of auditors to provide assurance on the quality of financial statements
Based on the results of the research conducted, it can be concluded that the more auditors perceived a situation as a high moral intensity one, the more they access their moral identity which in turn impacts their moral judgment depending on how central and important is moral identity to their self-definition
We can conclude that moral identity in general plays a very important role in auditor’s ethical decision making once running into an ethical situation
Summary
Recent economic and financial scandals such as Wirecard- Ernst & Young and the Anderson-Enron affair have raised many questions about the effectiveness of auditors to provide assurance on the quality of financial statements. The latest financial scandals have involved these same large accounting firms. This cannot be a sign of their technical incompetence since their recruitment and training policies meet and sometimes exceed professional standards. How can a reputedly competent auditor be associated with this type of scandal?. Audit quality is defined by De Angelo (1981) as "the joint probability that a given auditor will discover a breach in the client's accounting system and report on it". If the first probability depends on the overall competence of the auditor (technological capabilities, level of expertise, the procedures used...), the second probability depends on the auditor's level of professional ethics and independence from the client
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