Dysfunctional Audit Behavior
European Journal of Social Sciences – Volume 21, Number 3 (2011)
Dysfunctional Audit Behaviour: The Effect of Budget Emphasis Leadership Behaviour, and Effectiveness of Audit Review
Halil Paino, Azlan Thani Universiti Teknologi MARA Pahang, Malaysia E-mail: halil@pahang.uitm.edu.my Tel: +60193992676 Fax: +6094602245 Syed Iskandar Zulkarnain Universiti Teknologi MARA Pahang, Malaysia Abstract Dysfunctional audit behaviour is an accepted problem, associated with decreased audit quality. This study develops and tests a theoretical model that identifies factors contributing to dysfunctional audit behaviour. Budget emphasis, leadership behaviour structure and consideration, and effectiveness of audit review were examined as antecedents of attitudes toward dysfunctional audit behaviour. A path analysis from a partial least square (PLS) approach was employed based on survey results from 225 Audit Managers in Malaysia. The findings produced consistent evidence in support of the theoretical model. It is not an emphasis on meeting budgets that leads to undesirable behaviour, but contextual variables, such as leadership behaviour structure and effectiveness of audit review. The results of the study should impact auditing procedures, hiring, training and promotion decisions, and help to minimize the occurrence and acceptance of dysfunctional audit behaviour.
Keywords: Dysfunctional Audit Behaviour, Budget Emphasis, Leadership Behaviour Structure and Consideration, Audit Review
1. Introduction
The panel on Audit Effectiveness, established by AICPA’s Public Oversight Board to examine the issue of audit quality, gathered information from peer reviews and a survey of financial executives, internal auditors, and external auditing professionals. Their findings indicate that Dysfunctional Audit Behaviour (DAB) is a continuing concern for the auditing profession. This conclusion is significant because dysfunctional audit behaviour can adversely affect the ability of public
Dysfunctional Audit Behaviour: The Effect of Budget Emphasis Leadership Behaviour, and Effectiveness of Audit Review
Halil Paino, Azlan Thani Universiti Teknologi MARA Pahang, Malaysia E-mail: halil@pahang.uitm.edu.my Tel: +60193992676 Fax: +6094602245 Syed Iskandar Zulkarnain Universiti Teknologi MARA Pahang, Malaysia Abstract Dysfunctional audit behaviour is an accepted problem, associated with decreased audit quality. This study develops and tests a theoretical model that identifies factors contributing to dysfunctional audit behaviour. Budget emphasis, leadership behaviour structure and consideration, and effectiveness of audit review were examined as antecedents of attitudes toward dysfunctional audit behaviour. A path analysis from a partial least square (PLS) approach was employed based on survey results from 225 Audit Managers in Malaysia. The findings produced consistent evidence in support of the theoretical model. It is not an emphasis on meeting budgets that leads to undesirable behaviour, but contextual variables, such as leadership behaviour structure and effectiveness of audit review. The results of the study should impact auditing procedures, hiring, training and promotion decisions, and help to minimize the occurrence and acceptance of dysfunctional audit behaviour.
Keywords: Dysfunctional Audit Behaviour, Budget Emphasis, Leadership Behaviour Structure and Consideration, Audit Review
1. Introduction
The panel on Audit Effectiveness, established by AICPA’s Public Oversight Board to examine the issue of audit quality, gathered information from peer reviews and a survey of financial executives, internal auditors, and external auditing professionals. Their findings indicate that Dysfunctional Audit Behaviour (DAB) is a continuing concern for the auditing profession. This conclusion is significant because dysfunctional audit behaviour can adversely affect the ability of public