Donald F. Arnold

Internal and external auditor ethical decision‐making

Purpose - The aim of this exploratory research is to compare three sectors of the auditing profession – internal auditors, external auditors from larger international firms, and external auditors from smaller/regional firms – in regard to the influence of situational context on their ethically-related decision-making and judgment evaluations. Design/methodology/approach - Against the backdrop of five vignettes applied with a survey, the paper examines the potential influence of social consensus and magnitude of consequence on the ethical decision path of these three auditor groups. Findings - The paper finds that, in all cases, social consensus and magnitude of consequences exert influence on the ethical decision path. In the case of social consensus, however the paper finds that the ethical decision path is fully mediated for large firm auditors but is only partial mediated for the other two groups of auditors. Originality/value - This research examines responses from both internal and external auditors. Comparison between such groups is unique because these groups have not been well researched in the past literature.

Could the Level of Personal Indebtedness Influence an Auditor's Professional Decision-Making Process?

This research examines the effect of auditors’ personal debt on their audit decision making. We developed two different background scenarios that vary the level of the auditor’s personal debt. While one scenario indicated that the partner lived a modest lifestyle and was relatively free of debt, the other indicated that the partner lived an expensive lifestyle and had considerable personal debt. Our data indicate that auditors receiving the higher personal indebtedness scenario were more likely to believe that the auditor in the case study would sign-off on the audit without doing any additional work. We also found that the propensity to believe that the auditor in the case study would sign-off on the audit without doing any additional work decreased as the participants’ rank within the firm increased. Our research documents that a partner’s level of indebtedness could influence the participant’s audit decisions.