Our paper contributes to the audit literature by examining whether internal auditors' personal values measured by construal of self systematically influence their acceptance and likelihood of engaging in whistle‐blowing. China provides a particularly appropriate national context for our study because evidence shows that the traditional internal control systems have largely failed to achieve their objective of preventing wrongdoings. Internal auditors have been selected as subjects because of the importance placed on them by regulators and enterprises in designing and implementing whistle‐blowing systems. Construal of self has been selected for examination because it captures complex moral, cognitive processes experienced by individuals at both cultural and personality levels. This study develops and finds support for the hypotheses that, compared with independents, interdependent internal auditors are less accepting and less likely to engage in whistle‐blowing. The results also show the presence of “holier‐than‐thou” perception bias among internal auditors. The findings may benefit local and multinational enterprises, regulators, and researchers who are interested in designing and developing more compatible whistle‐blowing policies and procedures.
Researchers have tended to assume that Anglo-American theories and practices are equally applicable to other countries with their unique contextual environments. The aim of this research is to show that the theoretical model and empirical research findings in Anglo-American countries, with respect to evaluation of internal control systems, are not applicable to China. Specifically, there are two approaches to evaluate internal control systems: one is a risk-based audit approach, and the other is a control-based audit approach. Morrill, Morrill, and Kopp (2012) show that Canadian accountants who relied on a risk-first approach identified significantly more internal control deficiencies than accountants who relied on a control-first approach. Contrary to the research findings in Canada, this study provides experimental evidence that Chinese auditors who relied on a control-first approach identified significantly more internal control deficiencies than auditors who relied on a risk-first approach. The findings have implications for global convergence of auditing practices.
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