Influence of Ethical Organizational Culture on Auditors’ Judgement

There have been several scandals in the auditing world that question the professionalism of auditors, such as  Enron in 2001, Worldcom in 2002, Tyco, and many more. This indicates the presence of violation regarding ethics in the workplace and business environment. Auditors encounter a lot of difficulties when making decisions, not even infrequently facing ethical dilemmas. Conflict of interests may arise when clients’ needs and wants don’t align with auditors’ findings. When auditing a financial statement, auditors must act in accordance with the applicable code of conduct. However, those conflicts might pressure auditors to make decisions that lead to unethical behavior. Either ethical or unethical decisions, both can be caused by several things. But does ethical organizational culture play a role in it?

Some auditors conduct a shift in their decision-making when pressure from organization or situation exists. Not only that, unethical behaviour that is rationalized can develop into habit and, at times, considered reasonable to do. Several experts like Trevino (1986), Falah (2007), and Arens (2007) said that company policies can influence individuals in the ethical decision-making process. Ethical organizational culture plays a role in influencing auditors’ decisions since it communicates beliefs and values to the members so they are conscious and sensitive to ethical issues and therefore results in ethical decisions. Auditors’ ethics in decision making will increase if ethical culture is instilled well.

When faced with ethical dilemmas, auditors perceive them not only based on their own judgement, but also their coworkers’ and supervisors’. This leads to the organization’s ethical climate, which is how the members perceive situations and then shared widely to the whole organization. A shared perception will affect the way they behave to the situation and eventually affects the auditor in the action.

A study was once conducted to see the relations of ethical organizational culture to auditors’ decisions. It shows that a highly ethical decision is more likely to occur if the ethical organizational culture is applied. It also proves that when an organization's ethical climate cares more about rules, procedures, and laws in the practice rather than self-interest, auditors tend to make a highly ethical decision. Therefore, they imply that an organization’s ethical culture and its ethical climate play an important role in taking ethical decision-making to the next level.


Apriliani, D., Anggraini R., & Anwar, C. (2014). The Effect of Organization Ethical Culture and Ethical Climate on Ethical Decision Making of Auditors with Self Efficacy as Moderating. Rev. Integr. Bus. Econ. Res. Vol 4(1).