This research is motivated by the criticism levelled at the academic community for its failure to incorporate sufficient ethics education into the accounting curriculum :53–71, 2004; Madison and Schmidt 2006). The inclusion of ethics decision-making frameworks by professional bodies in their codes of conduct or as a standalone tool and the encouragement of their use as a part of ethics education to help students to identify and think through ethical issues in a business context has been subject to very limited (...) research to date. The aim of this study is to provide evidence of the impact of providing a framework on its own and providing a framework as part of a comprehensive integrated ethics education component of a first-year unit of study, on accounting students’ ethical sensitivity and judgment. Results indicate that providing students with a framework only does not increase students’ ethical sensitivity but does support their ethical judgment. In contrast, the integrated ethics component does increase student’s ethical sensitivity, however, an unexpected finding of this study is that increases in students’ ethical judgement are greater if they have not been previously exposed to the framework. Taken together, our findings suggest that it is the framework that has a significant impact on students’ ethical judgment, while an integrated ethics education can expose students to a range of ethical issues and thereby improve their ethical sensitivity, a critical component which initiates the ethical decision-making process. (shrink)

Motivated by the call for more research on students’ perceptions of their ethical development in business education programs, this study examines students’ reflections on how their understanding of ethics was challenged and/or changed, and what facilitated the development of ethical decision-making approaches in a first-year accounting course. The results indicate that students developed more sophisticated and contextualised views of ethical issues in business, government and social contexts including the need to consider their impact on various stakeholders. Students attributed this development (...) to the various elements in the integrated course design including the real cases sourced in current newspaper articles, an ethical decision-making framework with various ethical perspectives, the reflective journal component and the ability to work in groups. These findings have implications for the design of effective ethics education programs in business. (shrink)

This study examines the impact of the strength of an accounting firm’s ethical environment (presence and reinforcement vis-à-vis the presence of a code of conduct) on the quality of auditor judgment, across different levels of audit expertise. Using a 2 × 2 full factorial ‹between subjects’ experimental design, with audit managers and audit seniors, the impact of different levels of strength of the ethical environment on auditor judgments was assessed with a realistic audit scenario, requiring participants to make judgments in (...) respect of an inventory writedown. Based on prior research, and as hypothesized, participants possessing greater auditing experience made higher quality technical judgments. While there were no significant differences between the quality of audit judgments made by participants in the stronger ethical environment, over-all results indicate that managers are more sensitive to differences in the strength of the ethical environment than seniors. This is consistent with the hypothesis, and with prior research which suggests that the impact of the code will only be significant if it has been bilaterally internalized by individuals. This has important implications for accounting firms and regulators, given that the International Standard on Quality Control 1, requires the communication and reinforcement of ethical principles as part of firms' quality control processes. It suggests that firms will need to carefully consider the means by which they communicate and reinforce ethical principles, as it is possible to differentially impact auditors of different rank. (shrink)

This study examines the impact of the strength of an accounting firm's ethical environment on the quality of auditor judgment, across different levels of audit expertise. Using a 2 × 2 full factorial 'between subjects' experimental design, with audit managers and audit seniors, the impact of different levels of strength of the ethical environment on auditor judgments was assessed with a realistic audit scenario, requiring participants to make judgments in respect of an inventory writedown. Based on prior research, and as (...) hypothesized, participants possessing greater auditing experience made higher quality technical judgments. While there were no significant differences between the quality of audit judgments made by participants in the stronger ethical environment, over-all results indicate that managers are more sensitive to differences in the strength of the ethical environment than seniors. This is consistent with the hypothesis, and with prior research which suggests that the impact of the code will only be significant if it has been bilaterally internalized by individuals. This has important implications for accounting firms and regulators, given that the International Standard on Quality Control 1, requires the communication and reinforcement of ethical principles as part of firms' quality control processes. It suggests that firms will need to carefully consider the means by which they communicate and reinforce ethical principles, as it is possible to differentially impact auditors of different rank. (shrink)

We extend the literature by providing evidence that a cultural variable, intrinsic Islamic religiosity is important in understanding auditors’ judgement in the Islamic context of Pakistan. The intrinsic Islamic religiosity theoretical construct examined is Islamic Worldview which represents deeply held enduring and stable values which are likely to be dominant in influencing professionals’ judgements. Moreover, theoretical underpinning and empirical evidence in social psychology and organisational behaviour have established the critical role of intrinsic religiosity in influencing behaviour. Our first objective is (...) to examine whether IW impacts auditors’ judgements in the context of their acceptance of uncorroborated low-reliability client-provided evidence. Understanding the potential impact of cultural factors on auditors’ acceptance of client-provided information is an essential factor in improving audit quality. Our findings support the hypothesis that auditors with high IW scores are more likely to accept uncorroborated low-reliability client-provided evidence. Our second objective is to examine the relationship between IW and auditors’ preference for exercising more or less judgements. Examining this topic is important because auditing is a judgement-based process: auditors’ judgements determine audit quality and, by extension, the quality of associated financial reports. Our findings provide overall support for the hypothesis that auditors with high IW scores have a preference for exercising more judgement. Our findings have implications for global and national standard setters, regulators, practitioners, and researchers. The results are also relevant to global audit firms and their affiliates, particularly networks operating in Islamic countries, in ensuring global consistency of audits. (shrink)