Investigating the effect of organizational ethics program on the unethical behaviors of independent auditors, considering the mediating role of the individual cognitive appraisal process

Abstract

Objective: The importance of the performance of independent auditors is not hidden from anyone. Independent auditors play an important role in building public trust for investors and, at the public level, by refining financial information, they provide the basis for useful and informed decision-making. A commitment to ethical behavior is a characteristic that auditors are expected to possess because they are viewed as public watchdogs. Accordingly, they are expected to adhere to the provisions of the code of professional conduct. Recent scandals show that the independent auditing profession has a high risk of violating ethical principles. Violation of professional and ethical principles by independent auditors leads to a wide range of unethical behaviors that decrease the quality of audits and financial reports, violate the rights of investors, and damage the reputation of auditors and the auditing profession in society. Based on this, it is necessary and important to examine the ways to prevent the occurrence of unethical behavior in auditing institutions. What needs to be noticed is that to change people's behavior and prevent destructive behavior, it is necessary to consider both organizational factors and individual factors. In various organizations, to prevent the unethical behavior of employees, organizational ethics programs, including multiple control elements, are widely implemented. To achieve this goal, an organizational ethics program may be a compliance-oriented ethics program, or a value-oriented ethics program or a combination of both. According to the conducted studies, a compliance-oriented ethical program includes the control elements of punishment, monitoring, and internal reporting, which emphasizes the rules, laws, regulations, and perceived fears and threats caused by violating them to prevent unethical behavior of employees, and a Value-based ethics program includes the control elements of code of ethics, ethics training, and ethical support services that emphasize motivating employees to avoid doing wrong things by creating organizational ethical values to prevent unethical behavior of employees. In the current situation, the important issue is deciding the scope of an organizational ethics program, which means what control elements this program should include to minimize the unethical behavior of employees in an organization. Of course, it should be noted that these control elements may affect each other. Therefore, it is necessary to consider their simultaneous effect in studies that investigate the effects of these elements. Also, the protection motivation theory is used to understand and predict the intention and behaviors that protect a person from traumatic events. Based on this pattern, a threat message initiates two cognitive processes, including the threat appraisal process in the sense of the process of assessing the consequences of the threat and the coping appraisal process in the sense of the process of assessing the ability to deal with the threat and repel it. Therefore, when independent auditors are faced with ethical situations, the internal processes of threat appraisal and coping appraisal begin. Since an organizational ethics program affects the attitude and behavior of employees through the creation of a cognitive relationship, therefore the control elements of the organizational ethics program may affect these internal processes of auditors. Based on what was said, the purpose of this research is to investigate the direct and indirect (according to the mediating effect of each of the processes of threat appraisal and coping appraisal) effects of each of the control elements of the organizational ethics program in reducing the unethical behavior of auditors.

Methods: The present research is applied in terms of its objective, and it is descriptive-correlational in terms of its methodology. The spatial scope of the research is the auditing institutions that are members of the Certified Public Accountants Society of Iran, the temporal scope of the research is 2022, the statistical population of the research is all auditors employed in auditing institutions that are members of the Iranian Public Accountants Society and the statistical sample includes 171 members of this population who were randomly selected. The required data were collected through a researcher-made questionnaire, and the structural equation modeling method was used to analyze the data using Smart-PLS software.

Results: The results show that the ethical programs of auditing institutions, including a compliance-oriented control mechanism (includes the control elements of punishment, monitoring, and internal reporting), directly and indirectly (by affecting the threat appraisal process), and a Value-based control mechanism (includes the control elements of code of ethics, ethics training, and ethical support services), directly and indirectly (by affecting the coping appraisal process), play a decisive role in reducing the unethical behavior of independent auditors. On the other hand, the process of individual cognitive appraisal of independent auditors acts as a mediating variable in the relationship between organizational ethics programs and the unethical behavior of auditors.

Conclusion: Based on the research findings, it is necessary for audit institutions to pay due attention to the creation and strengthening of an effective organizational ethics program including adaptive and value-oriented control mechanisms to strengthen the process of individual cognitive appraisal of employees and prevent unethical behaviors of employees. Also, The Society of Certified Accountants of Iran and its executive board, with the aim of promoting the ethics and professional behavior in auditing institutions, should performs necessary supporting actions regarding the establishment and strengthening of effective control mechanisms in auditing institutions.