Cultural Influences on Judgments of Professional Accountants in Auditor–Client Conflict Resolution

Abstract

This study examines cultural influences on professional judgments of Australian, Indian and Chinese Malaysian accountants in relation to auditor-client conflict resolution. The study draws on cultural characteristics of, and differences among, these societies to formulate hypotheses that Australian accountants are less likely to resolve audit conflicts by acceding to clients than Indian and Chinese Malaysian accountants, and are also less accepting of resolving audit conflicts in this way. Data are gathered through a survey questionnaire administered to samples of senior accountants from "big-six" (at the time of data collection) firms in Australia, India and Malaysia. The questionnaire comprised an auditor-client conflict scenario, and used both single-item and multidimensional [specifically, the Multidimensional Ethics Measure of Robin (1988, 1990)] measures of professional judgment. The results support the hypotheses about differences in Australian compared to Indian and Chinese Malaysian professional judgments. Additionally, the results support the Multidimensional Ethics Measure as having greater explanatory power than a single-item measure. The results have implications for the international harmonisation of accounting and auditing standards, and for audit procedures and codes of conduct in international accounting firms.

Linking Culture and Ethics: A Comparison of Accountants’ Ethical Belief Systems in the Individualism/Collectivism and Power Distance Contexts

“…Using the Hofstede Power Distance and individualism dimensions, Patel et al (2002) reported differences in the responses of accountants from Chinese Malaysia (n ¼ 92), India (n ¼ 84), and Australia (n ¼ 72) on an auditor-client conflict scenario. The Australian accountants were less likely to resolve, and less accepting of resolving, auditorclient conflicts by acceding to clients.…”

Comments of the Auditing Standards Committee of the Auditing Section of the American Accounting Association on PCAOB Concept Release on Audit Quality Indicators, No. 2015-005, July 1, 2015

“…Potential evaluation of the effects of audit partner characteristics on audit quality may include analysis of partners signing the audit report and engagement tenure. Extant research suggests that cultural factors influence professional and auditor judgment (Hofstede 2001;Cohen, Pant, and Sharp 1995;Patel, Harrison, and McKinnon 2002;Hughes, Sander, Higgs, and Cullinan 2009;McGuire, Omer, and Sharp 2012;Knechel et al 2013).…”

Attitudes of management students towards workplace ethics: A comparative study between South Africa and Cyprus

“…while the major criticisms levelled at Hofstede (2001) include his generalisations about national culture based upon an analysis of sub-national populations and his inferring of national culture from averaging situationally-specific opinions of culture (McSweeney, 2002), many studies have utilised Hofstede's (1994) VSM instrument to study inter-country comparative ethical attitudes, decision-making and business practices (Armstrong, 1996;McKinnon, 2002;Nyaw & Ng, 1994;Patel, Harrison & Sims, 2006;Sims & Gegez, 2004;Tsui, 1996;Tsui & windsor, 2001). Sondergaard (1994) reports that over 60 published replications using the VSM instrument largely confirm Hofstede's (1994) findings.…”