The Role of Emotional Intelligence in Moderating the Relationship of Self Efficacy and Professional Skepticism towards the Auditor's Responsibility in Detecting Fraud

Abstract

The issue of fraud continues to plague organizations and stakeholders around the world because of its tremendous impact on business decisions. Starting from a financial scandal that resulted in the bankruptcy and collapse of a number of giant companies, such as Enron and WorldCom. This condition demands the attention of the auditor profession to actively find illegal acts in the company. Although the auditing standard (SA) No. 240 has determined that the external auditor is responsible for regarding fraud in an audit of financial statements, but in fact not all auditors can fulfill this responsibility. This study aims to examine the role of locus of control, task complexity, turnover intention and professional commitment to the acceptance of dysfunctional audit behavior. The population of this study is partner auditors, managers, supervisors, seniors and juniors who work in all KAP Denpasar City. The sample method used is non-probability with the snowball sampling method, obtained 81 respondents who are willing to fill out the questionnaire. The data analysis technique used to test the hypothesis is to use PLS-SEM analysis, with the help of SmartPLS 3.0 Software. The results show that the auditor's responsibility in detecting fraud directly can be increased by self-confidence and emotional intelligence. Other results show that although professional skepticism directly has not been able to increase the auditor's responsibility in detecting fraud, it will depend on emotional intelligence. It can be concluded that emotional intelligence is a pure moderator of the relationship between professional skepticism and the auditor's responsibility in detecting fraud.

Determinants of auditor's ability to detect fraud with professional skepticism as moderation at the inspectorate general of the ministry of public works and public housing

“…This is supported by the research of (Solichin et al, 2022), namely the whistleblowing system has a significant and positive effect on the auditor's ability to detect fraud. Amlayasa & Riasning (2022), found different things, namely that whistleblowing has no significant effect on the auditor's ability to detect fraud. Based on the description above, the third hypothesis proposed is as follows.…”

“…The auditor's ability to detect fraud is questionable because they do not detect any signs of fraud. If an auditor has limitations in detecting fraud then it will be used by other parties (Amlayasa & Riasning, 2022).…”

Emotional intelligence as a key driver of the formation of professional scepticism in auditors

“…In as far as professional scepticism is concerned, researchers have found a positive link between emotional intelligence, professional scepticism and an auditor's ability to detect fraud (Amlayasa & Riasning, 2022;Awaluddin et al, 2019;Zaini & Musyarofah, 2020).…”

The Auditor Self-Efficacy Scale: Measuring Confidence in Technical Skills, Technological Adaptation, and Interpersonal Communication

“…Auditors' self-efficacy influences their ability to make accurate judgments, engage in effective problem-solving, and navigate the intricate regulatory and ethical landscape of the profession (Mohd Iskandar et al, 2012;Muhsin, 2023;Zare Bidoki et al, 2023). Previous studies have established a link between auditors' self-efficacy and their performance (e.g., Afifah et al, 2015;Amanda et al, 2023;Su et al, 2016), decision-making quality (e.g., Apriliani et al, 2014), audit quality (e.g., Ardillah & Angelina, 2021;Djaddang & Lysandra, 2022;Lee et al, 2016;Salimi et al, 2020), and fraud detection (e.g., Al Natour et al, 2023;Amlayasa & Riasning, 2022;Rustiarini et al, 2021). Although existing research has delved into the implications of self-efficacy in auditing, particularly regarding auditors' performance, decision-making quality, audit quality, and fraud detection capabilities, a significant gap persists in the measurement instruments available for this specific professional domain.…”