Auditor acceptance of dysfunctional behaviour: an explanatory model using individual factors

Abstract

Dysfunctional behaviour and staff turnover are associated with decreased audit quality (Public Oversight Board, 2000). Dysfunctional audit behaviour such as premature sign-off, gathering of insufficient evidence, accepting of weak client explanation, altering or replacing the audit procedures, and under-reporting of time have negative effects specifically on the auditing profession and the development of human capital as a whole. While recent studies suggest that dysfunctional behaviour is a widespread problem (Donnelly, Quirin and Bryan, 2003; Otley and Pierce, 1996), extant research fails to adequately explain the causes. In this study, the organisational behaviour comprises of individual factors and industrial psychology literatures provide the basis for the developing and testing an individual factors' model over dysfunctional audit behaviour. Using a partial least square (PLS) technique, survey results from the registered Audit Managers generally support the explanatory model. Overall, results indicate that auditors who are more accepting dysfunctional behaviour tend to possess an external locus of control and exhibit higher turnover intentions. These results suggest that individual factors play a role in identifying those who are more accepting dysfunctional behaviour. The results can be useful in the operational and management control mechanism of human and social developments relating to dysfunctional behaviour issues.