Dysfunctional audit behaviour: an exploratory study in Malaysia

Abstract

PurposeThe quality of the opinion provided by audit firms is an important determinant of their long‐term survival, but audit quality is difficult to gauge, which makes it particularly sensitive to the behaviour of the individuals who carry on audit work. This paper seeks to identify the incidence of dysfunctional audit behaviours and audit quality reduction behaviours, actions taken by an auditor during engagement that reduce evidence‐gathering effectiveness.Design/methodology/approachThe paper is based on a survey of 244 auditors working in small/medium and big audit firms in Malaysia.FindingsThe paper identifies key variables leading to dysfunctional audit behaviour.Research limitations/implicationsThe paper is subject to the normal limitations associated with survey research.Practical implicationsThe paper provides basic empirical evidence of a potentially serious risk of dysfunctional behaviours that may impair audit quality.Originality/valueThe paper provides empirical evidence to address the concerns of the Malaysian regulatory authorities regarding audit quality.

Examination of Auditor Acceptance of Dysfunctional Behavior Using a Heuristic Model

“…This relationship is stronger in environments where employees assume there is too much supervisory control (Gable, 1994). Use of auditing programs, time budgets and close supervision could turn the auditing process into an extremely structured process (Smith, 2012). Performance parameters have also been employed in this study since they were employed in previous studies as well and their relevance was established (Donnelly, 2003).…”

“…These behaviors provide a tool for auditors to manipulate the auditing process (Donnelly, 2003). Locus of control has been employed in behavioral researches extensively to explain human behaviors in organizational contexts (Smith, 2012). Donnelly et al (2003) indicated that individuals have general expectations with regard to the question that whether success in a certain situation depends on individual behavior or is controlled by external forces.…”

“…The organization brings up individuals with whom such behaviors are easier than with other members of the family. This situation provides incentives that can stimulate individuals susceptible to dysfunctional behaviors (Smith 2012).…”

“…Findings show that auditor acceptance of dysfunctional behavior (DAB) is frequent in the auditing profession. DAB could have a reverse effect on the capability of government companies to create revenues, provide timely high-quality service, and evaluate employee performance precisely (Paino, 2012). So, auditing tests were given in Tehran and Shiraz which focused on certain factors facilitating this behavior.…”

The Influence of Individual Characteristics on Auditors’ Intention to Report Errors

“…Auditors' behaviour is reflective of his personality and individual characteristics when performing audit service [4]. Reference [5] argue that more ethical oriented individuals are more motivated in their intention to behave ethically than less ethical oriented people.…”