Governance Factors Affecting Internal Auditors' Ethical Decision Making: An Exploratory Study

Stewart, Jenny & O'Leary, Conor (2007) Governance Factors Affecting Internal Auditors' Ethical Decision Making: An Exploratory Study. Managerial Auditing Journal, 22(8), pp. 787-808.

PDF (96kB)

View at publisher


Purpose This paper explores the ethical decision making of internal auditors and the impact of corporate governance mechanisms thereon. It also explores whether ethical decision making is influenced by years of experience in internal auditing. Design/methodology/approach Sixty-six internal auditors were presented with five ethical dilemmas. For each scenario, a key element of corporate governance was manipulated to assess its impact on ethical decision making. These were audit committee support; management integrity regarding accounting policies; management integrity regarding pressure on internal audit; external auditor characteristics; and organisational code of conduct.
Findings Participants were generally sensitive to ethical dilemmas but were not always confident that their peers would act ethically. A higher quality external audit function was positively associated with internal auditors’ ethical decision making. However, the strength of other governance mechanisms did not appear to influence ethical decision making. Finally, more experienced internal auditors adopted a more ethical stance in some cases. Research limitations/implications Our sample was self-selected and may not be representative of internal auditors in general. Our lack of significant results may be due to insufficient variability in our manipulations and/or an oversimplification of reality in our scenarios.

Practical implications The study has implications for the internal audit profession with respect to training and the provision of support mechanisms to strengthen the ability of internal auditors to withstand pressure when dealing with ethical dilemmas. Originality/value This paper is the first to study whether the strength of other governance mechanisms influence internal auditors’ ethical decision making.

Impact and interest:

12 citations in Scopus
Search Google Scholar™

Citation counts are sourced monthly from Scopus and Web of Science® citation databases.

These databases contain citations from different subsets of available publications and different time periods and thus the citation count from each is usually different. Some works are not in either database and no count is displayed. Scopus includes citations from articles published in 1996 onwards, and Web of Science® generally from 1980 onwards.

Citations counts from the Google Scholar™ indexing service can be viewed at the linked Google Scholar™ search.

Full-text downloads:

1,507 since deposited on 05 Feb 2008
129 in the past twelve months

Full-text downloads displays the total number of times this work’s files (e.g., a PDF) have been downloaded from QUT ePrints as well as the number of downloads in the previous 365 days. The count includes downloads for all files if a work has more than one.

ID Code: 12294
Item Type: Journal Article
Refereed: Yes
Keywords: internal audit, ethics, corporate governance, external audit, years of experience
DOI: 10.1108/02686900710819643
ISSN: 0268-6902
Subjects: Australian and New Zealand Standard Research Classification > COMMERCE MANAGEMENT TOURISM AND SERVICES (150000) > ACCOUNTING AUDITING AND ACCOUNTABILITY (150100)
Divisions: Current > QUT Faculties and Divisions > QUT Business School
Copyright Owner: Copyright 2007 Emerald Publishing
Copyright Statement: Reproduced in accordance with the copyright policy of the publisher.
Deposited On: 05 Feb 2008 00:00
Last Modified: 29 Feb 2012 13:31

Export: EndNote | Dublin Core | BibTeX

Repository Staff Only: item control page