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Effects of role
Commitment to independence ambiguity and
by internal auditors: the effects role conflict
of role ambiguity and role conflict
899
Zaini Ahmad
Faculty of Accountancy, Universiti Teknologi MARA,
Shah Alam, Malaysia, and
Dennis Taylor
School of Accounting and Law, RMIT University,
Melbourne, Australia
Abstract
Purpose Taking a cognitive perspective of internal auditor independence, the purpose of this study is
to develop measures for the concepts of commitment to independence, role conflict and role ambiguity in
the context of the internal auditors work environment, in order to provide evidence of the effects of role
conflict and ambiguity, and their sub-dimensions, on the internal auditors commitment to independence.
Design/methodology/approach To measure these concepts, scales are developed for a
questionnaire by drawing on measures established in the organizational behavior literature and
adapting these to the internal auditors context. The questionnaire is sent to a sample of internal auditors
drawn from the database of the Institute of Internal Auditors Malaysia in which listed companies with
an in-house internal audit function are extracted. There are 101 useable responses.
Findings The results reveal that both role ambiguity and role conflict are significantly negatively
related to commitment to independence. The underlying dimensions found to have the greatest impact
on commitment to independence are: first, ambiguity in both the exercise of authority by the internal
auditor and time pressure faced by the internal auditor; and second, conflict between the internal
auditors personal values and both managements and their professions expectations and requirements.
Originality/value The results extend the literature on internal auditor independence and provide
insights for auditing standards setters and corporate governance designers.
Keywords Internal auditing, Role conflict, Role ambiguity, Malaysia
Paper type Research paper
1. Introduction
The ability to function with independence has been a long-standing challenge to
internal auditors and their profession a challenge that has received renewed
attention due to the rise of corporate governance. Corporate governance codes in most
countries typically require that internal auditors report functionally to the audit
committee of their companys board of directors and conduct their audit work
objectively. The International Standard for the Professional Practices of Internal
Auditing (ISPPIA, 2006) defines independence in terms of freedom from conditions
that threaten objectivity and the appearance of objectivity. The ISPPIA (2006) states
that objectivity means internal auditors are expected not to subordinate their Managerial Auditing Journal
Vol. 24 No. 9, 2009
judgment on audit matters to that of others, especially management. pp. 899-925
This study argues that the contemporary role of the internal auditor has become q Emerald Group Publishing Limited
0268-6902
increasingly affected by conflict and ambiguity. Such elements in the role of internal DOI 10.1108/02686900910994827
MAJ auditors can adversely impact on their ability to perform their function, including the
24,9 ability to exercise independence. It is posited in this study that the central work value
for internal auditors of having a personal commitment to exercising independence will
be influenced by the nature and extent of their role conflict and role ambiguity.
4. Literature review
4.1 Importance of audit independence
Independence, based on the criterion of objectivity, is pivotal to the internal auditing
profession and internal auditors (Mutchler, 2003). Independence is unavoidable
for internal auditors (Vanasco, 1994). Internal auditors should not be placed in a
position where their independence can be questioned and feel unable to make objective
professional judgments (Vanasco, 1994). Ideally, internal auditors must be free to
report matters they audit as they are and their reporting activities are not subject
to any influences (Sawyer and Dittenhofer, 1996). The ISPPIA (ISPPIA; IIA, 2006)
has identified internal auditors independence as a most important criterion for
MAJ effectiveness of the internal audit function. In general, shareholder and stakeholders
24,9 perceive internal auditors as being entrusted in making independent assessments,
judgments and decisions (Mutchler, 2003). In each case, internal auditors are expected
to have integrity and a commitment to forming unbiased opinions. Thus, to act
independently, internal auditors must have a thorough understanding of the influences
they face some of which may be so subtle as to be scarcely recognizable (in the way
902 they) color or influence independence (Mutchler, 2003).
There is also substantial literature that looks into specific conditions undermining
independence. Vanasco (1994) argues that internal auditors overtime tend to develop
personal relations arising from carrying out their internal reviews. They can also be
influenced by incentives, as found by de Zoort and Reisch (2000). Their study shows
that incentive compensation based on overall company performance potentially
impairs internal auditors objectivity and independence. A similar finding by
Schneider (2003) is that when incentive compensation is tied to share prices, internal
auditors will report GAAP violations less frequently. Vinten (1999) contends that being
on the payroll of a company, an internal auditor could not be truly independent.
In developing the scale for commitment to independence, three items are developed to
test the internal auditors belief and acceptance of the independence value. These three
items are reverse coded. For example, I feel very little loyalty to the concept of
independence. Further, another three items are constructed to examine the extent of
willingness and resistant to pressure in order to ensure dedication to independence.
For example, I am willing to put in a great deal of effort beyond that normally expected
in order to ensure dedication to independence. Finally, four items are constructed to test
the extent of personal desire to remain independence at all times. For example, I am
extremely glad that I choose an occupation that requires me to exercise independence.
MAJ Items have been modified by often replacing the word organization with the word
24,9 independence. Where necessary the items are reworded to include the word
independence. The reworded sentences are developed within the respective
dimensions mentioned above. Thus, the development of the scale envisages the
individual internal auditors acceptance, subscription to the notion of independence and
their support and striving for it evolving personal effort and responsibility. The scale is
906 focused and conveniently deals only with the concerns of independence.
Thus, the self-rating scales of the internal auditors assessment of his or her
commitment to independence comprise of ten items constructed around the above three
dimensions and specified after a review of the requirements of the international
standard on independence (Practice Advisory 1100-1, IIAM, 2006a). Based on a
seven-point Likert scale, 1 indicates low commitment to independence and 7 indicates
high commitment to independence.
The variable role conflict is measured by adapting the scales that were validated by
Rizzo et al. (1970). Based on the theory of role conflict and internal audit literature, role
conflict relating to internal auditors can be divided into three types: inter-role conflict,
intra-sender role conflict and personal role conflict. Thus, the inter-sender role conflict
measurement in the original scale is not adopted. Contextual adaptations to Rizzo
et al.s (1970) scales are made after a review of the internal auditors code of ethics, the
IIA (2006) as well as related literature.
Firstly, the dimension of inter-role conflict is developed after a review of the internal
auditors code of ethics, as well as studies by Sorensen (1967), Aranya et al. (1981),
Aranya and Ferris (1983, 1984), Aryee et al. (1991), Bamber and Iyer (2002), Harrell et al.
(1986) and Pei and Davis (1989). This literature makes it clear that internal auditors
receive monitoring from both the organization and the profession. Thus, inter-role
conflicts are found to occur in the environment of internal auditors (Harrell et al., 1986;
Pei and Davis, 1989). The inter-role conflict is a situation where the employer exercises
in meeting organizational values whereas the profession emphasizes meeting the
values such as maintaining the professional autonomy and high standards. In the
environment of internal audit, there is high probability that the internal auditors may
experience things that is accepted by the organization but not accepted by the
profession. Further, the chances to disregard professional ethical standards and agree
to management request with respect to reporting wrongdoing, weaknesses and
irregularities are also high. Complexity in business transactions can lead firms work
procedures and practices sometimes deviate from the standard practices of the
profession. Thus, the dimension of inter-role conflict is developed to test whether
internal auditors experience conflict between the demand of the organization and
the profession. Example of an item in this dimension is There are things I sometimes
have to do that are accepted by management but not accepted by my profession.
There are five items under this dimension.
Secondly, the revised definition of internal auditing requires internal auditors to be
independent and concurrently to consult in activities that can add values and improve
organizations operations (ISPPIA, 2006). Studies have suggested that the
incompatibility between the internal auditors audit oversight role and advisory
role is subject to conflict (Reynold, 2000; Cooper and Craig, 1983). Thus, the dimension
of intra-sender role conflict is developed to test whether the internal auditors audit
oversight role and advisory role will result in conflict. The developments of these
items are done after a review of the Practice Advisory 1000.C1-2, and literature that Effects of role
touches on these conflicting roles by Peursem (2004), Cooper and Craig (1983), Cooper ambiguity and
et al. (1996), Myers and Gramling (1997), Mutchler et al. (2001) and Mutchler (2003).
Example of an item in this dimension is, I would feel the pressure of conflict of interest role conflict
if required to work under both an audit role and advisory services role. There are
three items in this dimension.
Finally, internal auditors are also exposed to personal role conflict. For example, to 907
the extent that internal auditor has internalized the professional values promulgated
by the IIA code of ethics, internal auditor may face personal role conflict when they
have to act against a close friend and report wrongdoing of their colleague. According
to Mutchler (2003), the internal auditor may be tempted to overlook, soften or delay
reporting negative audit findings to avoid embarrassing the friends or relatives. The
dimension of personal-role conflict is represented by three items, prepared based on
incongruent between expectations and individual personal value systems which were
developed based on the definition provided by Griffin and Moorhead (2007) and prior
review of internal auditors code of ethics. Under this dimension, the items are
developed to see if internal auditors experience conflict between the required
expectation and their personal value system. For example, I sometimes have to do
things that should not be done that way (i.e. illegal).
The variable role ambiguity was established by Rizzo et al. (1970). Their study
identified the elements of role ambiguity as the extent of available guidelines to
provide knowledge, degree of certainty about duties and authority, specificity of
standards requirements, constraints in the allocation of time to tasks, and the clarity of
job descriptions. Their scales of role ambiguity are not, however, specific to internal
auditing. The global or unidimensional instrument of role ambiguity yields little
knowledge about the various dimensions (specific types) of ambiguity faced by
internal auditors. It does not consider specific dimensions of role ambiguity that are
frequently experienced by internal auditors, or psychological dimensions of role
ambiguity that affect internal auditors behavioral outcomes. To become applicable to
an internal auditors setting, the instrument in this study modifies Rizzo et al.s (1970)
scales by drawing on concepts found in Kahn et al.s (1964) role ambiguity theory and
items contained in the ISPPIA international standard of 2006. Therefore, to assess their
role ambiguity, internal auditors were asked to express the degree of clarity they
experienced in carrying out various aspects of their work. These aspects related to
available guidelines, a range of tasks, actual and perceived authority, scope of
responsibilities, expectations in standards and allocation of time. Thus, it is argued
that a multidimensional ambiguity instruments allow greater insights into the salient
types of ambiguity facing internal auditors. Since Kahn et al. (1964) believed the role
ambiguity concept to be quite diverse. It is thus necessary to understand the diversity
of role ambiguity of internal auditors.
The six dimensions of internal auditors role ambiguity proposed in this study are
derived from the keywords extracted from the unidimensional measures of role
ambiguity by Rizzo et al.s (1970) and they are as follows:
(1) Guidelines. One of the main duties of the internal auditors is to provide assistance
in the deterrence of fraud through examining and evaluating the adequacy and
effectiveness of the system of the internal control to commensurate the extent of
potential exposure or risk in the various segments of the organizations
MAJ operations (ISPPIA, 2006). Thus, in fulfilling this responsibility, internal auditor
24,9 should, for example, determine whether clear written policies are developed to
monitor activities and safeguard assets particularly in high risk areas; and there
exist a clear policies and guidelines on systems operations and testing (ISPPIA,
2006). Importantly, appropriate authorization policies for transactions are
established and maintained (ISPPIA, 2006). Furthermore, clarity of written
908 policies that describe prohibited activities and action required whenever
violations are discovered is also essential (ISPPIA, 2006). Thus, the dimension of
guidelines is developed to examine whether internal auditors received or
developed those aspects clearly, for example, I received or develop clear
guidelines on high risk areas.
(2) Task. The job of internal auditors includes assessing of internal control system,
detecting fraud and reporting wrongdoing (ISPPIA, 2006). Thus, in performing
these tasks internal auditors must be clear of what to be assessed and clear of
action required when irregularities, weaknesses and wrongdoing are
discovered. The dimension of task is therefore develop to ask whether
internal auditor are clear on what has to be done on internal control assessment,
and what has to be done when wrongdoing, irregularities and weaknesses are
discovered. For example, I am always clear on what has to be done with
respect to internal control assessment.
(3) Authority. The duty of internal auditors clearly requires them to be
independent. The essential element that must be possessed to achieve
independence is for internal auditors to have appropriate level of authority and
to be certain of their authority. Without having certainty of their authority or if
they do not enjoy a clear level of authority internal auditors may not be in a
position to counter management pressure (Peursem, 2004). Hence, in developing
the dimension of authority, internal auditors were ask whether they
understood well their authority in relation to reviewing and commenting on
report from managers at various level in the organization responsible for
authorizing the payment of funds; reviewing transactions that are approved at
executive level and finally, having access to actions of the board of directors
(Sawyer and Dittenhofer, 1996). For example, My authority is well understood
in relation to having access to actions of the board of directors.
(4) Responsibilities. Internal auditors have to be very clear of their day-to-day
responsibilities. The day-to-day responsibilities of internal auditors encompass
the assessment of internal control system and fraud detection (ISPPIA, 2006).
In the course of performing these duties, internal auditor will encounter
irregularities as well as wrongdoing. The dimension of responsibilities is
developed to determine whether internal auditors know what their
responsibilities are when internal control is assessed and when wrongdoing
and irregularities are discovered. For example, I know what my
responsibilities are when internal control system is assessed.
(5) Standards. The purpose of standards is to delineate basic principles that
represent the practice of internal auditors as it should be as well as to establish
the basis for the evaluation of internal audit performance (ISPPIA, 2006). As
standards act as a point of reference in performing internal auditors job, it is
therefore very crucial for it to be as clear as possible and not subject to multiple Effects of role
interpretations. Thus, in developing the dimension of standards the internal
auditors were ask whether they are clear of the expectations of standards with
ambiguity and
respect to discovery of internal control weaknesses, discovery of wrongdoing role conflict
and discovery of irregularities. For example, There is no doubt about what the
internal audit standards want me to do in-respect of discovery of internal
control weaknesses. 909
(6) Time. Time constraints are common factor in an auditing environment to
include internal auditing. The contemporary roles of internal auditors will
expose internal auditors to face with time constraints either by way of time
budget pressure or time deadline pressure. Azad (1994) evidenced that
uncertainty of time allocation could have an adverse effect on internal auditors
job. The dimension of time is developed to ask whether internal auditor believes
that their time has been divided properly in the task of evaluating internal
control weaknesses, investigating wrongdoing and irregularities. For example,
I believe my time is divided properly in the tasks of evaluating internal control
weaknesses.
Items in the scale which represent ambiguity are stated in terms of the absence of
ambiguity, where on a seven-point Likert scale, 1 indicates greatest ambiguity and
7 indicates least ambiguity. In this study:
(1) guidelines, represented by five items;
(2) tasks, represented by four items;
(3) authority, represented by three items;
(4) responsibilities, represented by three items;
(5) standards, represented by three items; and
(6) time, represented by three items.
independence, role ambiguity and role conflict (Hair et al., 2006). In evaluating for
convergent and discriminant aspect of construct validity this study further runs
bivariate correlation (Grimm and Yarnold, 2002).
Table II also shows construct validity as reflected in loadings onto a single factor
for the overall measures of role ambiguity and role conflict (KMO $ 0.6, factor
variance . 0.6). The multi-item dimensions of role conflict and role ambiguity also
load onto single factors for each of the separate dimensions of role conflict and
ambiguity, respectively. Further, Table II shows that statistically the measurement of
commitment to independence does not meet the requirements of both KMO and factor
variance. Thus, face validity is conducted to confirm whether the concept of
commitment to independence measures what it is intended to measure. This study has
obtained experts judgment as to whether the measure of commitment to independence
taps a particular construct with sufficient breadth and depth. Three experts have
correctly judged the concept and agreed that all items used to measure commitment to
independence are conceptually appropriate.
9.3 Hierarchical regression analysis using overall measures of role ambiguity and role
conflict
This section analyses the influence on commitment to independence of overall role
ambiguity and overall role conflict, respectively, measured as the mean of their various
dimensions. But first, any confounding effects on commitment to independence arising
from relevant control variables concerning the background of internal auditors or their
department are considered. The age, experience and qualifications of the respondents, as
well as their place in their work team, are chosen as control variables because, like the
cognitive dependent variable of commitment to independence, these are variables about
the personal aspects of the individual. Using a hierarchical multiple regression
approach, the first regression model enters only the control variables, whereas the
second model enters both the control and the test variables. Results are presented in
Table IV.
The result in Table IV show the adjusted R 2 value for Model 1 is only 1 percent and
the model is not significant. No control variables in Model 1 have an effect on internal
auditors commitment to independence. Therefore, no further analysis is carried out
with respect to these control variables because they do not cause a confounding effect
on the dependent variable.
In Model 2 of Table IV, the inclusion of the variables overall role ambiguity and
overall role conflict, give the model significant explanatory power. Adjusted R 2 value
in Model 2 is 15 percent and the model is significance at 1 percent level. The coefficient
results show that both role ambiguity and role conflict are significantly inversely
related to commitment to independence.
Role ambiguity (low 1; high 7) 101 3.83 1.00 4.83 2.3610 0.73300 0.537 Table III.
Role conflict (low 1; high 7) 101 4.39 0.67 5.05 2.1589 0.95377 0.910 Descriptive statistics for
Commitment to independence role ambiguity, role
(low 1; high 7) 101 2.89 4.11 7.00 5.6040 0.71656 0.513 conflict and commitment
Valid n (listwise) 101 to independence
24,9
912
MAJ
Table IV.
independence
and commitment to
Relationships between
role ambiguity/conflict
control variables, overall
Model summarya
ANOVA
Model R R2 Adjusted R 2 Standard error of the estimate (F value) Sig. of F
1 0.175b 0.031 20.010 0.71999 0.792 0.552b
2 0.449c 0.201 0.150 0.66056 3.946 0.001c
Coefficientsa
Unstandardized Collinearity
coefficients Standardized coefficients statistics
B Standard error Beta t Sig. Tolerance VIF
Model 1
(Constant) 5.559 0.423 13.132 0.000
Age of IA 2 0.048 0.126 20.044 2 0.378 0.707 0.749 1.335
Working experience as IA 2 0.048 0.103 20.058 2 0.465 0.643 0.648 1.544
Academic qualification of IA 0.026 0.081 0.035 0.317 0.752 0.840 1.190
Number of staff in IA department 0.125 0.080 0.159 1.575 0.119 0.992 1.008
Model 2
(Constant) 6.968 0.512 13.604 0.000
Age of IA 2 0.078 0.119 20.072 2 0.659 0.511 0.708 1.413
Working experience as IA 2 0.054 0.095 20.065 2 0.569 0.570 0.647 1.544
Academic qualification of IA 2 0.028 0.075 20.038 2 0.373 0.710 0.818 1.222
Number of staff in IA department 0.079 0.074 0.100 1.059 0.292 0.953 1.049
Role ambiguity 2 0.271 0.098 20.277 2 2.758 0.007 0.840 1.191
Role conflict 2 0.189 0.075 20.252 2 2.505 0.014 0.842 1.188
Notes: aDependent variable: commitment to independence; bpredictors: (Constant), number of staff in IA department, age of IA, academic qualification of
IA, years working experience as IA; cpredictors: (Constant), number of staff in IA department, age of IA, academic qualification of IA, years working
experience as IA, role ambiguity, role conflict; VIF variance inflation factor
This evidence first reveals that when role ambiguity is higher in its various dimensions, Effects of role
internal auditors commitment to independence is reduced. Ambiguity is measured to ambiguity and
include the existence of clear written policies on important issues, clarity of task,
authority, responsibilities and standards and certainty of time allocation. The absence of role conflict
such circumstances can undermine internal auditors self-confidence in making
judgments and decisions in undertaking their tasks and professional responsibilities.
According to Kahn et al. (1964), ambiguity can create a sense of futility for an 913
individual. Beauchamp et al. (2004) also suggest that if individuals are unclear about their
primary role due to lack of requisite information for successful performance of that role,
their performance will diminish. As shown by the result in Table IV (beta 20.277,
sig. 0.007), such a feeling arising from role ambiguity translates into a weakening of
the internal auditors commitment to independence. This result supports arguments in
the external auditing literature by Lindsay (1990) that lack of precise technical guidance
could lead auditors to be susceptible to client pressure and by Knapp (1987) that when
precise technical standards are absent for auditors, management tend to obtain their
preferred outcome. It also lends support to the arguments by Page and Spiral (2005) that
ambiguity damages the preservation of professional power and provides interest groups
with room to maneuver. These latter two points will create conditions in which internal
auditors are more vulnerable to subordinating their judgment on audit matters to that of
others thereby creating pressures that can weaken their commitment to independence.
Second, the evidence in Table IV reveals that role conflict also has a significant
negative affect on commitment to independence. Role conflict in this study first
includes measures of perceived incompatibility between managements demands or
expectations and those of the auditing profession. This is referred to as inter-role
conflict. Many studies have considered this issue (e.g. Gouldner, 1958; Sorensen, 1967;
Sorensen and Sorensen, 1974; Aranya et al., 1981; Aranya and Ferris, 1983, 1984; Aryee
et al., 1991; Bamber and Iyer, 2002; Harrell et al., 1986; Pei and Davis,1989). Second, role
conflict includes measures of intra-sender role conflict that arises due to the inherent
incompatibility between the internal auditors audit oversight role and management
consulting role. Finally, role conflict includes the dimension of personal role conflict in
which an internal auditor perceives that managements expectations are incongruent
with the internal auditors personal value system. To the extent that an internal auditor
has internalized the professional values promulgated by the IIAMs code of ethics, he
or she may face this type of personal conflict when management suggests that a report
not be prepared on a wrongdoing uncovered about particular manager.
The result in Table IV (beta 2 0.252, sig. 0.014) indicates that when internal
auditors perceive a greater presence of overall role conflict their commitment to
independence becomes weakened. This result lends support to three lines of argument
in the auditing literature. First, the argument is supported that incompatibility between
the audit oversight role and management advisory role of internal auditors will
undermine internal auditors independence (Cooper et al., 1996; Myers and Gramling,
1997; Reynold, 2000; Peursem, 2004). Second, the result supports the argument by
Harrell et al. (1989) that conflict between the goals of the organization and the
profession can threaten the objectivity of the internal auditor. Third, the result
supports the argument that incompatibility between internal auditors own values or
beliefs and behaviors required by the role may bring about a weakening in their
commitment to independence (Dittenhofer, 1997).
MAJ 9.4 Hierarchical regression analysis using separate dimensions of role ambiguity and
24,9 role conflict
To provide a closer understanding of types of role circumstances that impact on
commitment to independence, this section analyses the influence of the specific
dimensions underlying role ambiguity and overall role conflict. These dimensions were
validated as separate constructs in Table II.
914 Using a hierarchical multiple regression approach, the first regression model enters
the six dimensions of role ambiguity. The second model enters the role ambiguity
dimensions and, additionally, the three dimensions of role conflict. Results are
presented in Table V.
The result in Table V shows that adjusted R 2 for Model 1 (a test of the influence of
role ambiguity variables only) is fairly low at 9.7 percent, but does represent a model
with significant explanatory power (sig. 0.015). In Model 2, where role conflict
variables are added, the models adjusted R 2 increases strongly to 22.5 percent.
First, results in Table V Model 1 reveal that four of the six dimensions of role
ambiguity are not significantly related the internal auditors extent of commitment to
independence. These four non-significant dimensions of role ambiguity are:
(1) written policies and guidelines that may have been developed internally in the
company;
(2) given sets of tasks and task priorities;
(3) understanding of responsibilities within their organizations corporate
governance framework; and
(4) principles and requirements in auditing standards that may be too broad and
open to alternative interpretations.
The inference is that ambiguities in these fields do not create sufficient concern or
stress to cause internal auditors to feel their commitment to independence is
weakened.
On the other hand, the dimension of time pressure is found to be weakly inversely
related (beta 2 0.219, sig. 0.082). This result supports a prior study on time
pressure by Azad (1994) who finds that tight schedules of work will interfere with
the proper conduct of internal audits. Similarly, studies in external auditing include the
findings that insufficient time reduces auditors assessment of time to complete the
audit (Kermis and Mahapatra, 1985) and cause auditors to prematurely sign off
(Alderman and Detrick, 1982).
Finally, in Table V Model 1, it is found that the ambiguity dimension concerned
with authority is significantly inversely related to commitment to independence
(beta 0.240, sig. 0.058). This dimension concerns ambiguity in authority granted,
or deemed to be granted, to the internal auditor to take actions within his or her
organization particularly concerning matters of discovery of wrongdoing and
irregularities. If this authority is more uncertain or transient, then a reduction in
commitment to independence is evident. This authority could potentially stem from the
audit committee or management within the internal auditors organization, or by
invoking authoritative pronouncements of the IIA. This finding supports the argument
by Peursem (2004) who contends that New Zealand internal auditors do not enjoy the
clear level of authority that marks an external professional. He further notes that
Model summary a
Model R R2 Adjusted R 2 Standard error of the estimate ANOVA (F value) Sig. of F
1 0.389b 0.151 0.097 0.68096 2.788 0.015b
2 0.543c 0.295 0.225 0.63061 4.235 0.000c
Coefficients a
Unstandardized Collinearity
coefficients Standardized coefficients statistics
B Standard error Beta t Sig. Tolerance VIF
Model 1
(Constant) 6.318 0.243 26.018 0.000
Guidelines 0.124 0.082 0.181 1.512 0.134 0.634 1.578
Tasks 20.038 0.158 20.043 2 0.241 0.810 0.288 3.474
Authority 20.159 0.083 20.240 2 1.920 0.058 0.576 1.737
Responsibilities 20.019 0.165 20.025 2 0.117 0.907 0.202 4.963
Standards 20.062 0.127 20.079 2 0.486 0.628 0.339 2.950
Time pressure 20.151 0.086 20.219 2 1.759 0.082 0.583 1.716
Model 2
(Constant) 6.489 0.250 25.966 0.000
Guidelines 0.102 0.078 0.148 1.318 0.191 0.611 1.638
Tasks 0.206 0.158 0.231 1.303 0.196 0.246 4.069
Authority 20.142 0.078 20.215 2 1.832 0.070 0.560 1.784
Responsibilities 20.121 0.157 20.156 2 0.773 0.441 0.190 5.269
Standards 20.095 0.118 20.122 2 0.806 0.422 0.336 2.979
Time pressure 20.140 0.081 20.202 2 1.719 0.089 0.561 1.782
Intra-sender role conflict 20.022 0.075 20.030 2 0.298 0.767 0.740 1.352
Inter-role conflict 20.074 0.067 20.148 2 1.106 0.271 0.430 2.326
Personal role conflict 20.423 0.173 20.311 2 2.440 0.017 0.477 2.094
Notes: aDependent variable: commitment to independence; bpredictors: (Constant), guidelines, tasks, authority, responsibilities, standards, time pressure;
c
predictors: (Constant), guidelines, tasks, authority, responsibilities, standards, time pressure, intra-sender role conflict, inter-role conflict, personal role
conflict; VIF variance inflation factor
independence
ambiguity/conflict and
dimensions of role
Relationships between
role conflict
commitment to
Table V.
ambiguity and
Effects of role
915
MAJ without such authority, internal auditor may not be in a position to influence
24,9 management when actions of managers are inappropriate, nor be in a position to be
heard by, or influence, their organizations board or audit committee. Such conditions
may underlie the result in this study that ambiguous authority has a negative effect on
commitment to independence.
Turning to the results in Model 2 of Table V, the role conflict dimension of inter-role
916 conflict between the professions requirements and organizations requirements is
found to be not significant. This finding could be interpreted to indicate that internal
auditors believe they are able to quickly resolve any potential pressures from
management to make them deviate in their work procedures and practices from the
codes and standards specified by their profession, especially concerning the auditing
professions pronouncements about maintaining their independence. In other words, in
performing their functions in an independent way, internal auditors tend to perceive
that they are able to follow professional standards without creating conflict with the
organizations policies and processes.
The next dimension of role conflict in Model 2, intra-sender conflict between the
advisory role and oversight role of the internal auditor, is also not significantly
related to commitment to independence. This dimension of role conflict was found, on
average, to be low, suggesting they perceive their management advisory role and audit
oversight role does not often come into conflict. The inference of this finding is that
internal auditors in Malaysia would tend to disagree that they have to focus only on
their audit oversight role to ensure their independence.
The final dimension of role conflict in Model 2, personal role conflict, is significantly
negatively related to commitment to independence (beta 2 0.311, sig. 0.017). The
circumstances underlying this finding are that internal auditors may have to take a
compromise decision either in their professional auditing role or in their management
advisory role that goes against their own personal principles or values. Such decisions
are likely to entail ethical dilemmas (e.g. recommending the firing of a colleague or
reporting the wrongdoing of a senior manager). In such personal role conflict
circumstances, the commitment to act objectively and independently is found to be
weakened.
10. Conclusions
The notion of independence of internal auditors, in terms of not subordinating their
judgment to others on audit matters, is investigated in this study from an attitudinal
rather than an instrumental perspective. The first objective of this study, therefore, has
been to operationalize the concept of commitment to independence. A measure for the
concept of commitment to independence cannot, surprisingly, be found in prior
auditing research literature. Scales from the established measure of organizational
commitment found in the organizational behavior literature, especially the instrument
originated by Porter et al. (1974), are chosen as a basis for the development of this
measure.
The research question then addressed is what behavioral factors, of a generalizable
nature, can help explain or predict an internal auditors commitment to independence?
It is argued that internal auditors take place within a complex, rapidly changing
organizational and professional environment. Such an environment can mean that
individual internal auditors are faced with circumstances where expectations are
unclear and understanding is inaccurate (i.e. there is role ambiguity). Their role can Effects of role
also be conducive to role conflict by the way it is positioned within their organization ambiguity and
and between their organization and their professional body. Prior literature
demonstrates that role ambiguity and conflict exists in the environment of external role conflict
auditors (Senatra, 1980; Rebele and Michaels, 1990) as well as internal auditors (Sawyer
and Dittenhofer, 1996; Harrell et al., 1986; Pei and Davis, 1989).
This study has been able to develop new scales to measure the concepts of 917
commitment to independence, role conflict and role ambiguity in the context of the
internal auditors work environment, by adapting from measures established in the
organizational behavior literature. Using the data from a survey of internal auditors in
listed companies in Malaysia, this study has been able to provide statistical tests to
validate these measures. Both the overall role concepts and the multi-item
sub-dimensions of these concepts have been validated. Multiple regression results are
then provided of relationships between role conflict and ambiguity, and their
sub-dimensions, and the internal auditors commitment to independence. The results
reveal that both role ambiguity and role conflict are significantly negatively related to
commitment to independence. The underlying dimensions found to have the greatest
impact on commitment to independence are ambiguity in the exercise of authority by the
internal auditor and time pressure faced by the internal auditor, and conflict between
management and professional requirements and the internal auditors personal values.
This study extend the literature on internal auditor independence by considering
the notion of commitment to independence and relating this to role theory for the first
time. Further, the findings provide insights that should be relevant to the IIAM (2006b)
in their deliberations concerning their Professional Practices Framework which
embraces their New Handbook on Corporate Governance. Finally, the concepts and
findings in this study should also assist practicing in-house internal auditors in listed
companies in framing their perceptions of factors potentially threatening the
maintenance of their independence.
Directions for further research are suggested as follows:
.
Outsource internal auditor have not been considered. The determinants of
commitment to independence for in-house internal auditors may differ in
comparison to the outsourced internal auditors.
.
Other independent variables could be modelled. The set of audit monitoring
mechanisms used by corporations include the boards audit committee and the
external auditors. The working relationship of internal auditors with their
organizations audit committee, as well as their external auditors, may be
significant additional variables impacting on the internal auditors commitment
to independence.
.
Alternative research methods could provide considerable refinement to the
understanding of the relationships between the variables in this study. An
experimental design could help establish whether a threshold level of role
ambiguity or role conflict exists in terms of the critical level of impact on
commitment to independence that will alter the internal auditors actual
decisions. Alternatively, a qualitative case study approach could be taken to
explore the behaviors of internal auditors in their field in contexts where role
ambiguity or conflict is found to exist.
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Appendix
Effects of role
ambiguity and
CONFIDENTIAL WHEN COMPLETED role conflict
SECTION 1
921
The statements listed below will describe some specific characteristics about your
AUDIT FUNCTION.
Using the scale below, please circle the number that corresponds with how true each
statement is for your AUDIT FUNCTION.
A. Strongly Strongly
I received and/or develop: Disagree Agree
B. Strongly Strongly
Disagree Agree
I am always clear on what has to be done:
(continued)
MAJ C. Strongly Strongly
24,9 My authority is well understood in relation to: Disagree Agree
D. Strongly Strongly
Disagree Agree
I know what my responsibilities are when:
E.
Strongly Strongly
There is no doubt about what the internal audit Disagree Agree
standards want me to do in-respect of:
F.
Strongly Strongly
Disagree Agree
I believe my time is divided properly in the tasks of:
B. Strongly Strongly
Disagree Agree
(continued)
MAJ C. Strongly Strongly
24,9 Disagree Agree
I sometimes have to do things that:
SECTION 3
Listed below are a series of statements that represent possible feelings that individuals
might have about independence concept.
With respect to your own feelings about independence, please circle the number that
corresponds with how true each statement is for you.
A. Strongly Strongly
Disagree Agree
B. Strongly Strongly
Disagree Agree
(continued)
C. Strongly Strongly
Effects of role
Disagree Agree ambiguity and
role conflict
1. This independence concept really inspires the
1 2 3 4 5 6 7
very best in me in the way of job performance.
925
2. I am extremely glad that I choose an occupation
1 2 3 4 5 6 7
that requires me to exerciseindependence.