International Journal of Trade, Economics, and Finance: Will Final Year Accountancy Students Whistle Blow?

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International Journal of Trade, Economics and Finance, Vol. 3, No. 5, October 2012

Will Final Year Accountancy Students Whistle Blow? A Malaysian Case Mazlina Mustapha and Ling Sing Siaw

Abstract—This paper aims to explore the ethical views of final year accountancy students in Malaysia. Specifically, this study seeks to investigate the final year accountancy students’ perception on whistle blowing and the likelihood of blowing the whistle in relation to seriousness of questionable act, gender, race and academic performance. About 150 questionnaires were distributed to final year accountancy students in a public university in Malaysia; however, only 105 questionnaires were usable and completed to be used in the study. Majority of the respondents are taking a relatively moderate approach towards their willingness to blow the whistle. The regression result reveals that the seriousness of the unethical act has a significant and positive relationship with the probability of blowing the whistle by these students. In addition, the result appears to suggest that high academic achiever have a negative relationship with the probability of blowing the whistle. Index terms—Ethics, final year accountancy students, whistle blowing, Malaysia.

I. INTRODUCTION Following the worldwide corporate scandals in the US and Europe, public scrutiny of accountants decisions have increased. More attention is directed to the ethicality of the accountants’ actions [15]. Ethical conduct has been recognized as an important element in accounting profession and education [1]. It is believed that professionalism and ethics should be upheld. One of the areas of interest relating to ethic is whistle blowing. Whistle blowing is defined as the disclosure by an organization’s member of any illegal, immoral or illegitimate practices under the control of their employers to a person that may be able to affect action [8]. After the Enron case, perception on whistle blowing beginning to change, whistle blowing is now viewed as an accountability and risk management tool that can be used to safeguard the interest of the company and public [11]. It is also claimed that there has been a substantial increase in the recognition of the importance of whistle blowing as a mean of reducing corruption and dangerous situations by improving the disclosure of information about illegal, dangerous or unethical activities by government and private organization [4]. Countries around the world are now working to develop legal regimes to encourage these important disclosures and 

protect the whistle blowers from retribution [4]. Over 30 countries have now adopted specific whistle blower protections, while others have adopted protections through other laws such as labor laws or public sector employment rules [4]. In Malaysia, a whistleblower provision is found in the Companies Act 1965. Subsection 174(8) of the act requires auditors to report to the Companies Commission of Malaysia, if the auditor encountered a breach or noncompliance with any provision of the Company Act in the course of the statutory audit. The requirements to report breaches of laws are often referred as the “whistle-blowing” duty. Section 50 and 99E of the Securities Industry Act 1983 also require auditors to report breaches of securities law to the authorities. Although interest in whistle blowing continues to increase, little is known about why some employees who observe wrong doing report it, while others do not [16]. In an attempt to address the public’s concerns, the accounting profession has emphasized the need to start ethics education early in an accountant’s career, even before he or she enters the profession [17]. Prior studies on how accounting students react to whistle blowing is limited and mostly conducted outside Malaysia. This reveals the need to further investigate this issue. Thus, this study is conducted to examine the final year accountancy students’ perception on whistle blowing...
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