The objective of this study is to evaluate auditors’ perceived responsibility for fraud detection. Auditors play a critical role in managing fraud risk within organizations. Although professional standards and guidance prescribe responsibility in the area, little is known about auditors’ sense of responsibility for fraud detection, the factors affecting perceived responsibility, and how responsibility affects auditor performance. We use the triangle model of responsibility as a theoretical basis for examining responsibility and the effects of accountability, fraud type, and auditor type (...) on auditors’ perceived fraud detection responsibility. We also test how perceived responsibility affects auditor brainstorming performance given the importance of brainstorming in audits. A sample of 878 auditors participated in an experiment with accountability pressure and fraud type manipulated randomly between subjects. As predicted, accountable auditors report higher detection responsibility than anonymous auditors. We also find a significant fraud type × auditor type interaction with external auditors perceiving the most detection responsibility for financial statement fraud, while internal auditors report similar detection responsibility for all fraud types. Analysis of the triangle model’s formative links reveals that professional obligation and personal control are significantly related to responsibility, while task clarity is not. Finally, the results indicate that perceived responsibility positively affects the number of detection procedures brainstormed and partially mediates the significant accountability–brainstorming relation. (shrink)

AbstractEnduring unethical behavior in trading has generated much research interest, and scholars disagree on the reasons for this situation. According to MacIntyre (2015), this has to do with the personal traits of traders, whereas Rocchi and Thunder (2019) argue this is due to permissive work environment that can potentially be changed to favoring ethical trading. We contribute to this debate by exploring how interactions between organizational culture and management control systems (MCSs) may affect the enduring unethical behaviors of traders. We (...) conceptualize this with the concepts of organized hypocrisy (Brunsson 1986, 1989, 1993) and decoupling (Meyer and Rowan 1977). An in-depth case study of fraud (Jerome Kerviel at Societe Generale), informs the empirical inquiry. We develop the concept of organized decoupling to characterize how the MCSs are articulated with the organizational culture favoring unethical behavior, while being used as a ‘safety mechanism’ to manage the legal and reputational risk of the bank. The analysis highlights three key features of the organized decoupling of MCS: physical distance, technical distance and social distance. The study contribution lies in showing that decoupling is not only emergent but might be intended and therefore organized. The findings also raise doubts on the role of MCSs in monitoring trading activities as presented by investment banking institutions and regulators, suggesting more organized hypocrisy, and raising significant concerns regarding the creation of tolerable work environment welcoming ethical behaviors in the investment banking sector. (shrink)

Professional integrity is a fundamental principle of the International Ethics Standards Board for Accountants Code of Ethics. This does not apply directly to members of a particular professional body, but rather member organizations from around the globe are required to adopt a code no less stringent than the principles in the IESBA Code. Hence, all professional accountants are required to possess integrity as a core ethical principle. In the USA, certified public accountants must, in addition, also adhere to the principle (...) of client advocacy in relation to their tax clients. Despite extensive prior literature on accounting ethics, firm culture, and ethical codes, no prior research has tested whether the communication of an Integrity ethical standard actually affects practitioners’ actual judgments and decisions. In this study, we use brief interventions to determine whether a prime of two ethical professional standards affects tax practitioners’ recommendations to their clients. One implication for professionalism in tax practice is our finding that a brief intervention of professional standards can directly impact on practitioners’ judgments. Most notably, a joint presentation of Advocacy and Integrity leads to contrasting results that depend on the order of the intervention. In sum, when the Integrity standard was presented before the Advocacy standard, tax practitioners were significantly less likely to choose a tax-favorable outcome. That is, the order of professional ethical standard intervention significantly affects tax practitioners’ judgments. (shrink)

Prolific research suggests identity associates with pro-environmental behaviours that are individual and/or group focused. Individual PEB is personally driven, self-reliant, and are conducted on one's own. Group focused PEB is other people-reliant and completed as part of a group. A wide range of identities have been related to PEBs. For example, a recent systematic qualitative review revealed 99 different types of identities studied in a PEB context. Most studies were correlational, few had an experimental design. However, the relationships between all (...) these identities and PEBs have so far not been tested quantitatively with meta-analytical techniques. As such, a clear overview of this field is currently lacking. Due to the diverse nature of the field, a priori hypotheses were not possible and relatively broad definitions of identity had to be used to encompass all types of identities and the diverse meanings of identity that have been included in PEB research. What prior theory did allow for was to assess the distinction between two main types of identity, namely how people label, describe, and recognise oneself individually, or as part of a group. Our overall goal was thus to assess the current state of knowledge on identities and PEBs. In 104 studies using a meta-regression following the preferred reporting items for systematic reviews and meta-analyses guidelines, our random-effects meta-analysis showed that the overall concept of identity associated with PEB with a medium Pearson's r. Furthermore, we found that individual identities associated more strongly with PEBs than group identities. The associations between individual and group identities were stronger when the identity and PEB were from the same category. Methodologically, the findings revealed that group identities and group PEBs were most strongly associated for self-reported rather than observed PEBs. Overall identity associated most strongly with group PEBs in the field rather than in the lab and in student- rather than non-student samples. We discuss the theoretical and practical implications. (shrink)