Conceptual Research Framework

0.13 0.03 0.17*

-0.58*** 0.55*** 0.80***

-0.31** 0.08 0.43* 0.22

Significant Path CMIN/DF=2.01 GFI=0.90 AGFI=0.89 Not Significant Path NFI=0.89 CFI=0.92 RMSEA=0.05 RMR=0.04

*p < 0.1；** p < 0.05；*** p < 0.01 Obedience

Pressure

Moral Perception

Moral Judgmen

t

Moral Intention Moral

Maturity

Moral Intensity

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Table 6 Path Analysis Results

Structural Path Path Coefficient t-Value Hypothesis Result Moral perceptionÆMoral

Judgment 0.55*** 3.30 H1a Supported Moral Judgment ÆMoral

Intention 0.80*** 3.90 H1b Supported

Moral IntensityÆ Moral

Perception 0.08 1.01 H 2a Not Supported

Moral Intensity Æ Moral

Judgment 0.43* 2.37 H2b Supported

Moral Intensity Æ Moral

Intention 0.22 0.09 H2c Not Supported

Moral maturityÆ Moral

Perception 0.13 1.39 H3a Not Supported

Moral Maturity Æ Moral

Judgment 0.17* 1.97 H3b Supported

Moral Maturity Æ Moral Intention

0.03 1.46 H3c Not Supported

Obedience PressureÆ

Moral Perception -0.58*** -6.01 H4a Supported

Obedience PressureÆ

Moral Judgment -0.31** 2.60 H4b Supported Note :*p < 0.1；** p < 0.05；*** p < 0.01

5. Conclusions

This paper aims at developing a moral decision-making model for internal auditors. We design and develop measurement items that are suitable for each stage of the moral development process. Past studies mainly employed the moral decision-making model of Rest (1986) which is a generalized model ignoring the ethical issues under various environments (i.e., the ethical issues in auditing), and lacking the determinants affecting different moral steps. To bridge the gap, this study proposes a complete moral decision-making model for internal auditors that integrate “contextual” factors, “audit issues,” and “personal” factors.

This paper further investigates the factors affecting the moral decision-making process of internal auditors with the help of literatures and hypothetical inferences. Empirical results show that during the moral development process, moral perception, moral judgment, and moral intention can take place. This also verifies the results of O’Leary and Stewart (2007). Further, this paper classifies the determinants affecting the moral decision-making process into moral intensity of audit issues, obedience pressure in contextual aspect, and moral maturity in personal aspect. For the audit issues aspect, this paper uncovers that higher moral intensity of internal auditors will has a positive effect on moral judgment. Internal auditors with higher moral maturity also have higher moral judgment. In other words, the major reasons affecting moral judgment are moral maturity and moral intensity, which are related to the audit issues or personal virtue. This finding has never been discussed in previous research, which is one of our contributions of this study. Besides, the obedience pressure affects the moral perception of internal auditors in a negative way, so it is easier to cause inappropriate behavior intention. Their perception on acting in accordance with ethical standards is lower. This finding is another theoretical contribution of this paper. Finally, the obedience pressure has a negative effect on moral judgment. The finding verifies the results of DeZoort and Lord (1997).

According to the empirical findings, this study suggests managerial and

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academic implication in regards to IIA, internal auditors, and government.

Because internal auditors have different moral development situations on the ethical issues, we suggest the IIA should enhance the promotion of moral training of internal auditors and the Code of Professional Ethics. As a result, internal auditors are encouraged and regulated to establish righteous, objective, fair, and careful characteristics. Besides, internal auditing has been played as an important role in a corporation, and its function and benefits have been receiving much attention. However, internal auditing is facing pressure from business owners because of the stakes of the company. This paper suggests internal auditors to seek the help from auditing managers or top management (e.g. audit committee, independent director) when they are facing moral dilemmas or pressure from the organization so as to clarify the responsibility of the particular audit issue.

Moreover, this paper suggests that business owners should respect the importance and influence of internal audit reports. Internal audit reports are not only documents that disclose the company’s defects; the audit findings should be given the needed attention. This is simply because the purpose of internal auditors is to protect the company’s interests, rather than to whistle-blow (Bowrin, 2004; Chung

et al., 2009).

Finally, there are few suggestions for the government. To enhance the moral responsibilities of internal auditors, this paper suggests establishing guidelines for internal control in related laws and regulations. If internal auditors fail to work from the viewpoint of internal control, it is necessary to set up a rule or law to avoid internal auditing not bringing its control mechanism into full play. On account of the enhancement of law, internal audit reports should maintain their legal force so that the business and competent authorities will respect them.

Besides, the government should not only disclose such information as the change of internal audit managers, but also the change of internal auditors. This can protect the rights of the interested parties, and it can also resolve the invisible pressure given to internal auditors for a long time so that they can keep their independence during auditing.

There are several limitations in this paper. We only discuss the correlation among research variables rather than setting up a fictitious moral situation to measure the variables; that is, to explore the factors of moral decision-making model of internal auditors by “simulation situational script.” Abbott, Parker and Peters (2012) situational script standardizes the social stimulus of respondents, which presents their decision-making factually. Hence, this paper suggests using experimental design to examine the causal relation among variables in the future.

Secondly, this paper employs six items to measure moral intensity and is proved to have fair reliability. However, some of them have insufficient factor loading, which is one of our limitations. The research of Tsalikis, Seaton, and Shepherd (2008) can be a reference for future studies, because they employ the conjoint analysis to examine the importance of moral intensity in the moral decision-making model. This method conducts tests regarding each dimension of moral intensity in order to obtain an accurate assessment. Finally, we use a questionnaire, which limits our data collection, because there may be a “halo”

effect, or false answers from the respondents. It is suggested that future studies may use case study to conduct interviews in person in order to have a more objective research result.

References

Abbott, L. J., Parker, S. and Peters, G. F. (2012), “Audit Fee Reductions from Internal Audit-Provided Assistance: The Incremental Impact of Internal Audit Characteristics,” Contemporary Accounting Research, 29(1), 94-118.

Arens, A., Elder, R. and Beasley, M. (2003), Auditing and Assurance Services: An

Integrated Approach, New York, NY: Prentice Hall.

Armstrong, M. B. (1987), “Moral Development and Accounting Education,”