Internal auditors’ independence under workplace bullying stress: an investigative study

Abstract

Purpose This study aims to examine the direct influence of workplace bullying (WB) on internal auditors’ independence using the nexus between the agency theory and social exchange theory. From the internal auditors’ perspective, the investigation covered both government and private colleges and universities in one of the Middle East countries. Design/methodology/approach A survey was administered and delivered to internal auditors at each of the 85 educational institutions. A total of 267 valid questionnaires were analysed. The study’s measurement and structural models were tested and evaluated by using SmartPLS v.4 and partial least squares-structural equation modelling. Findings The study results indicated that bullying is common among senior managers, and that it has a significant, negative, high-level and direct effect on the independence of internal auditors in the higher education sector. Practical implications Regulators and other stakeholders should make a deliberate effort to promote positive behaviours and abandon negative ones regarding the independence of internal auditors and the performance of audit teams, which play a crucial role in enhancing the efficiency of audit units. For example, enhancing coordination and communication internally and externally. In addition to providing the internal auditors with equitable advancement and learning opportunities, senior management should also support their professional development. Originality/value To the best of the author’s knowledge, this study is the first to examine the relationship between WB and the internal auditor’s independence in the context of government and private organisations in Southwest Asian countries.

Objectivity Threats: Would it Jeopardise Malaysian Internal Auditors’ Risk Judgment Quality?

“…The result of the current study indicates a loophole in the governance of internal audit, particularly in the aspect of the reporting line (Chambers & Odar, 2015), which need to be addressed to ensure that internal auditor can discharge their duties objectively. The results also supported Ali et al (2012), Shamsuddin et al (2014), andTaha (2023), who found that internal auditors were threatened to the extent that they were hindered from discharging their duty efficiently and effectively.…”

“…The expertise of both the CAE and the internal audit staff members in forming a sound risk judgment will determine the result of the risk assessment exercised, which is undertaken at least once a year. Specifically, ISPPIA states that an internal auditor "must be alert of significant risk affecting the objectives, the operation and resources" (IIA, 2016), be it the existing risk or emerging risk (Ibrahim, 2016;KPMG, 2008;Soh & Martinov-Bennie, 2011: Taha, 2023. Kotb et al (2020) have aptly underscored the necessity for future research endeavors aimed at exploring the evolving role of internal auditors within risk-based corporate governance.…”

“…Source: IPPF: Practice Guide on Independence and Objectivity (Jameson, 2011) Comparing the listed objectivity threats, the most highly cited objectivity threats in the academic literature are the social pressure threat, familiarity threat, and self-review threat resulting from certain conditions, especially the internal audit's organizational status, dual roles (assurance versus consulting) and the use of internal audit as a management training ground (Stewart & Subramaniam, 2010). A study conducted in the Middle East found that social pressure is present in the form of persistent workplace bullying over an extended period, which has a detrimental impact on an internal auditor's ability to confidently voice valid opinions and identify flaws, mistakes, and unethical conduct (Taha, 2023). At times, internal auditors may find themselves compelled to offer somewhat partial information and reports in an attempt to evade bullying from senior managers.…”

“…Additionally, they may face isolation as they hesitate to openly discuss the challenges they encounter in the workplace. These factors collectively contribute to a diminished dedication to improving internal audit processes and practices (Taha, 2023). In Malaysia, Razali et al (2016) found the most prevalent objectivity threats are social pressure threats, cognitive biases threats, and intimidation threats.…”

Influence of blockchain and artificial intelligence on audit quality: Evidence from Turkey

“…Companies are subject to various regulatory requirements and must adhere to accounting principles and reporting frameworks [ 1 ]. High-quality audits provide independent assurance that these compliance requirements are met, reducing the risk of penalties, legal consequences, or reputational damage [ 2 ]. Quality audits contribute to effective corporate governance by holding management accountable and independently assessing the company's financial reporting [ 3 ].…”