Conflict of Interest and Ethical Dilemmas of Independent Auditors; Situations and Strategies

Abstract

Background: Conflicts of interest and the resulting ethical dilemmas play a decisive role in the unethical behavior of independent auditors. The main objectives of this study are to identify different situations of conflict of interest of independent auditors and the resulting ethical dilemmas and also to find strategies for managing and controlling each of these situations. Method: In this paper, the exploratory approach of the mixed research method (qualitative-quantitative) has been applied. In the qualitative section, the statistical population is the experts in the field of independent auditing. A sample of 14 partners, managers, and supervisors of auditing firms members of the Iranian Society of Certified Public Accountants were selected based on the theoretical sampling method. The tools of data collection are semi-structured interviews and the method of data analysis is qualitative content analysis. In the quantitative, the statistical population, Certified Public Accountants in auditing firms in which a sample of 91 of them was randomly selected. The data collection tool is a researcher-made questionnaire based on the results of the qualitative section and the data analysis method is structural equation modeling. Results: Findings showed that independent auditors become involved in conflicts of interest and ethical issues when disagreeing with a client they fear of losing, when facing with inappropriate job opportunities, when conducting the review process, and when facing with challenges in performing tasks. Also, managing the conflict of interest of independent auditors require the collective efforts of owners, the community of certified public accountants and independent auditors at the individual level and at the level of the audit firm. Conclusion:The results of this study are important because they can provide a good framework for promoting ethics in the auditing profession.

Social Components Affecting the Occurrence of Moral Gap

“…The researchers' findings showed that moral choices are strongly influenced by the social environment in which individuals interact socially with others (11). Conflicts of interest and the resulting moral dilemmas play a decisive role in immoral behavior (31). The results of expert research suggest that if there is no social justice, there will be no morality.…”

Unravelling The Auditors’ Dilemma: Ethics Or Money? A Case Of Indonesia Auditors

“…In many research, conflicts that occur among auditors are because auditors tend to try to maintain their professionalism (Putri & Pratiwi, 2021) (Doozandeh et al, 2022) (Arabyarmohamadi et al, 2022) (Hoseininasab et al, 2020) which is a form of auditor behavior when the party being audited/client defends their wishes or their institution. Conflicts are more common in accounting professional organizations than in accountants who work in business organizational environments.…”