Sei sulla pagina 1di 27

The current issue and full text archive of this journal is available at

www.emeraldinsight.com/0268-6902.htm

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.

2. Motivation and objective


900 This study is motivated to consider anew the issue of auditor independence because
developments in corporate governance have led to a heightened recognition that internal
auditing is integral to control mechanisms and is a control mechanisms per se (Gramling
et al., 2004). But independence is not an aspect of internal auditing that can be
mechanically exercised. Since professional pronouncements on auditor independence,
such as ISPPIA (2006), tend to be principles based more than rules based, the exercise of
independence will be cognitive in nature. It will rely on the internal auditors personal
attitude and commitment towards the exercise independence in carrying out tasks and
making judgments at work. That is, it is contended in this study that the notion of
independence of internal auditors, in terms of not subordinating their judgment to others
on audit matters, is more meaningfully perceived as attitudinal than as instrumental in
nature. The first motivation of this study, therefore, is 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.
As explained in the next section, the fundamental positioning of the role of internal
auditors can create a challenge to their ability to commit themselves to maintaining
independence. First, their role contains inherent conflicts. Such role conflicts can derive
from potential contradictions between their audit oversight role and the management
consultative services role, as well as potential differences between directives of their
professional body and demands of their organizations management. Second, conditions
of complexity and change in the operating environment of internal auditors, including
technological and regulatory complexity and change, have become increasingly
conducive to role ambiguities. Such role ambiguities or lack of clarity can create work
tensions that undermine the internal auditors ability to maintain a steady commitment
to exercising professional independence.
The second motivation of this study, therefore, is to develop measures for the
concepts of role conflict and role ambiguity, and their sub-dimensions, in the context of
the internal auditors environment, in order to provide evidence of the effects of role
conflict and ambiguity on the internal auditors commitment to independence.
The main objective of this study is to test the effects of role theory on internal auditors
commitment to independence. It does so by providing evidence of the relationships
between dimensions of role conflict and ambiguity and the extent of commitment to
independence through a survey of internal auditors in listed companies in Malaysia.

3. Inherent role problems for internal auditors


The fundamental positioning of the role of internal auditors, it is contended, creates a
challenge to their ability to function with independence. First, consider the inherent
presence of role conflict. The role of internal auditors in providing audit oversight for
their organization together with consulting services to management can cause an Effects of role
ongoing conflict. In their audit role, internal auditors must remain independent of ambiguity and
management by not subordinating their judgment to management in audit matters. But
in their consultative role, they must collaborate with and support management, role conflict
including accepting the judgment of the audit committee of the board of directors. Given
the need for a close working relationship with the boards audit committee, the potential
for the internal auditor to face this kind of role conflict may have been heightened. Prior 901
studies about conflict between auditors audit and consultative roles (Cooper and Craig,
1983; Cooper et al., 1996; Myers and Gramling, 1997) have been undertaken
before corporate governance codes emerged to have an effect of the work of internal
auditors.
A second potential for role conflict relates to the positioning of internal auditors own
professional associations. The directives of the Institute of Internal Auditors within a
country or internationally have the potential to be incompatible with the demands and
accountabilities of the internal auditor to his or her employing organization. For
example, conformance with professional standards or values by an internal auditor may
have the effect of compromising performance targets that have been set by his or her
organizations management.
In addition to potential role conflict, it is contended that the environmental
conditions faced by internal auditors have become increasingly conducive to role
ambiguity. Sawyer and Dittenhofer (1996) suggests that the internal auditor can carry
out internal investigations where:
[. . .] operating processes may be unfamiliar, complex and bewildering [. . .] [with] operating
people [in the organization] speaking a language and using terms that are foreign to the
internal auditors knowledge and experience (p. 1236).
Over the past decade or so, companies tend to operate with increasingly sophisticated
technology, growth in e-commerce transactions, more variations in management
control systems, more human resource turnover, and ongoing changes to corporate and
professional rules and regulations. Such underlying change and complexity in the
organizations operating environment can make it increasingly difficult for internal
auditors to conduct their audit tasks or apply professional standards with sufficient
clarity. Faced with ambiguity, internal auditors would have less certainty about
whether the information gathered in the course of their examinations is sufficiently
objective and relevant. Hence, role ambiguity could undermine their ability to exercise
professional independence.

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.

4.2 Role theory


Kahn et al. (1964) introduced role theory to the organizational behavior literature. They
suggest that an organizational environment affects the expectations of individuals
about their role behaviors. These expectations involve norms or pressures to act in a
certain way. The focal person receives these messages, interprets them and responds in
some fashion. Problems arise when messages sent to the focal person are not clear, not
direct, not easily interpretable and do not fall within the focal persons range of
acceptance. Consequently, these messages are assessed to be ambiguous or conflicting.
When this occurs, the focal person may respond in a manner that is not expected by the
role sender.
Expectations can originate from the role itself, the people holding the role, society
and others who inquire about the role. The expectations others hold on the role
incumbent are known as the social role. Anyone who is salient to the role incumbent
will form these expectations. For the internal auditor, expectations can be formed by
the board of directors, the supervisors, or professional peers who rely on the job
performance of the internal auditor. Different individuals or entities can form
conflicting expectations on the role incumbent. Because an individual simultaneously
occupies multiple social roles, it is possible that varying roles may result in opposing
role requirements. Kahn et al. (1964) refer to this situation as role conflict.
Role theory states that when behaviors expected of an individual are inconsistent he
or she will experience stress, depress, become dissatisfied, and perform less effectively
than if the expectation imposed did not conflict. Thus, it can be seen that role conflict
can adversely affect an individuals state of mind. Stated in another way, role conflict
can decrease individual commitment.
Role ambiguity is a concept that explains the availability of role-related information.
Certain information is required for adequate performance, that is, for a person to
conform to the role expectations held by the role senders. The role incumbent must know
what the expectations are: the rights, the activities and the responsibilities of his or her
position. Additionally, he or she must know what activities will fulfill the responsibility
of the position and how those activities are to be performed. Potential consequences
of role performance or non-performance for the individual and the organization are also Effects of role
considered. Lack of information can result from two causes. First, the required ambiguity and
information does not exist and, second, it does exist but is not available to the person who
needs it. Thus, ambiguity in a given situation may result either because information is role conflict
non-existent or because existing information is inadequately communicated.
Like role conflict, Kahn et al. (1964) postulate that role ambiguity should increase
the probability that a person will be dissatisfied with his or her role, will experience 903
anxiety, will distort reality and thus perform less effectively. Kahn et al. (1964) also
suggest that role ambiguity increases when organizational complexities exceed the
individuals span of comprehension. Accordingly, an internal auditor who has to deal
with role ambiguity is likely to find it more difficult to maintain a commitment to
acting with independence.

5. The context of the study


This study is confined in its scope of evidence to the perceptions and beliefs of internal
auditors employed in listed companies in Malaysia. The Asian financial crisis in the
late 1990s with its associated corporate collapses in Malaysia, propelled the internal
auditing function into the limelight. In particular, Technology Resources Industries
Bhd was found to have issued RM260m of false invoices between 1998 and 1999, after
it was taken over by Telekom Malaysia in 2002 and discovered to have a lack of
internal controls (Fadzil et al., 2005). Similarly, the collapse of Perwaja Steel in 1996
leaving RM7 b in debts, was attributed to lack of internal controls. Investigation
revealed that misconduct in Perwaja Steel included inaccurate accounting records and
transactions and claims without supporting documents or without authorization
(Abdul Rahman, 2006).
As a result of these failed cases, the need for internal auditing to be established by
all listed companies in Malaysia was written into the Malaysian Code of Corporate
Governance (The High Level Finance Committee on Corporate Governance, 2001). This
code states that:
[. . .] the board [of listed companies] should establish an internal audit function [. . .] which
should be independent of the activities they audit and should be performed with impartiality,
proficiency and due professional care.
Pursuant to the requirement of the code, the Bursa Malaysia (formerly the Kuala Lumpur
Stock Exchange) established an industry task force which formulated the Statement on
internal control: guidance for Directors of public listed companies. It included guidance
for listed companies on making disclosures in their annual reports about the state of
internal control, as required under Bursa Malaysias listing requirements.
In May 2001, the Malaysian Securities Commission appointed the Institute of Internal
Auditors Malaysia (IIAM, 2002) to establish a separate industry task force to formulate a
guideline on the internal audit function. Guidelines on Internal Audit Function was
published by the industry task force in August 2002 to provide a balanced view on the
state of internal audit practices in Malaysia. Its purpose has been to assist the boards of
listed companies to effectively discharging their responsibilities in relation to
establishing an internal audit function. It allows the outsourcing of this function, if
having an in-house internal audit function is not possible. Another guideline that
touches on the need for internal audit establishment by a company is the New Handbook
MAJ on Corporate Governance (Kulasingham, 2002). This handbook emphasizes the
24,9 importance of the internal audit function as an integral part of the internal control
system and as the best safeguard a company can have against inefficiency, fraud and
control failure.
Overall, members of the IIAM are bound by the Professional Practices Framework
which embraces the New Handbook on Corporate Governance and the ISPPIA. These
904 documents delineate the principles, code of ethics and definitions of internal auditing.
Table I shows the percentage of listed companies in Malaysia that have established
an in-house internal audit function, have outsourced the function or have yet to create
an internal audit function. It provides a breakdown according to companies listed on
the main board, second board and Mesdaq.

6. Research question and choice of research design


Given that the exercise of independence by companies in-house internal auditors is
necessarily largely attitudinal in nature, and given that the modern role of in-house
internal auditors contains potential for inherent ambiguities and conflicts, the overall
research question posed in this study is:
Can the invoking of role-theory provide an explanatory basis for the extent of commitment by
in-house internal auditors to the exercise independence?
Prior literature has not sought to directly measure relationships between elements of
role theory and internal auditors independence. To provide evidence on whether or
what extent internal auditors with higher perceived role conflict and role ambiguity
have lower personal commitment to exercising professional independence in their
workplace, the research design in this study must facilitate the construction and
validation of the following variable measures:
.
Scales for the cognitive concept of commitment to independence by internal
auditors, drawing on the established sub-dimensions of the concept of
organizational commitment and a review of the ISPPIAs definition of
independence.
.
Scales for the concepts of role conflict and role ambiguity faced by internal
auditors, adapting the sub-dimensions of established scales in the management and
external auditing literature to the context of inter-role conflict, intra-sender conflict,
personal values conflict and work-related ambiguities faced by the internal auditor.

Main board Second board Mesdaq Total Percentage

Internal audit function is carried out


by the in-house internal audit
department 444 105 16 565 55.9
The company has outsourced the
internal audit function to a consultant 171 125 36 332 32.8
The company does not have an
Table I. internal audit function 35 24 55 114 11.3
Internal audit department Total 650 254 107 1,011 100
established in listed
companies in Malaysia Source: IIAM, March 2007
This study chooses to gather data through a postal questionnaire administered to a Effects of role
sampled population of internal auditors. This method is appropriate for studying ambiguity and
perceptions and values of individuals, since it can allow confidentiality and anonymity
and encourage frankness in the responses. It can also use a sampling method that role conflict
permits generalizability of results to a wider population.

7. Survey method 905


7.1 Sample selection
The sample is drawn from the database of the IIAM in which listed companies with an
in-house internal audit function were extracted. A copy of the questionnaire instrument
was sent to the in-house internal auditor in each of these listed companies. As at March
2007, the number of listed companies with in-house internal audit function was 565,
representing 55.9 percent of the total number of listed companies in Malaysia. The
target respondent for this study is in-house internal auditors who have worked in listed
companies with at least three years working experience. The unit analysis is this
individual internal auditor. A total of 101 useable responses were obtained,
representing a response rate of 17.9 percent.
This study did not consider the outsourced internal auditors as part of the sample.
The reason is in-house internal auditors are in the organization on day-to-day basis as
they are employees of the company. Thus, the nature of employer-employee relationship
provides an environment in which the independence of judgments of internal auditors
can be compromised (Ahlawat and Lowe, 2004). This view is supported by Haron et al.
(2004). Their finding is that in-house internal audit is less independent.

7.2 Development of scales for the instrument


The variable commitment to independence is operationalized by adapting Porter et al.s
(1974) scale for organizational commitment. Aranya et al. (1981) developed scales for
professional commitment by using Porter et al.s (1974) same three dimensions of
commitment which they regarded as generic to the concept. The current study also takes
these generic dimensions of commitment , i.e. a strong belief in values, a willingness
to exert considerable effort and a strong personal desire to apply to the
operationalization of the variable commitment to independence in the following form:
.
A strong belief in and acceptance of the professional code of ethics concerned
with the value of professional independence.
.
A willingness to exert considerable efforts in order to fulfill the professions
fundamental principle of maintaining independence.
.
A strong personal desire to be independent at all times.

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.

8. Validity and reliability tests


Construct validity and reliability tests are undertaken on each of the multi-item
variables. The results are given in Table II.
To be consistent with other measurements, all 21 items for role ambiguity are
inversely coded. Table II reveals that overall measures of the three variables are both
reliable (Cronbach alpha . 0.7 in all cases). Exploratory factor analysis has identified
three factors of commitment to independence, six factors of role ambiguity and
three factors of role conflict. The identified factors are then named. Each of the factor
identified under exploratory factor analysis are then tested for factor
unidimensionality using principal component factor analysis. All identified factors
under each instrument are found to load onto a single factor. Prior to testing
for unidimensionality, this study assesses factor structure stability by equally splitting
the sample and re-estimates the factor models to test for comparability (Hair et al.,
2006). Summated scales are then formed by combining several individual variables
that has been found to load on a single composite measure. All variables loading
highly on a single factor identified earlier are combined and the mean score of the
variables is used as a replacement variable (Hair et al., 2006). Finally, summated scales
with multiple dimensions are created for the overall construct of commitment to
MAJ
Dependent and independent Reliability Cronbach Factor variance . 60
24,9 variables (overall) alpha . 0.7 KMO $ 0.6 percent (percent)

Commitment to independence 0.810 0.521 55.89


Role ambiguity 0.943 0.799 60.03
Role conflict 0.923 0.606 65.82
910 Role ambiguity dimensions
Guidelines 0.906 0.826 72.86
Task 0.905 0.801 77.88
Authority 0.801 0.641 72.03
Responsibilities 0.954 0.755 91.56
Standards 0.957 0.724 92.08
Time 0.852 0.638 77.73
Role conflict dimensions
Table II. Inter-role conflict 0.951 0.847 83.66
Reliability and construct Intra-sender role conflict 0.879 0.741 80.57
validity Personal role conflict 0.861 0.690 78.42

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. Data analysis and discussion


9.1 Respondents demographic information
The respondents in this study represent a wide cross-section of the population of
internal auditors in Malaysia. Most of the respondents are male (74.3 percent) with an
age range above 31 (89.1 percent). Of the respondents, 74.3 percent have 4-20 years
working experience as an internal auditor. All respondents have formal university or
professional qualifications. Of the respondents, 69.3 percent are member of the Institute
of Internal Auditors. The majority of the respondents are working in an internal audit
department with staff between 4 and 10, in organizations from several industries.

9.2 Descriptive statistics for independent and dependent variables


This study seeks to first identify the extent of commitment to independence, role
ambiguity and role conflict of Malaysian internal auditors. Table III presents the
overall mean scores, standard deviation and variance for these variables based on the Effects of role
data from self-rated seven-point Likert scales, where 1 indicates least ambiguity and ambiguity and
conflict and lowest commitment to independence; 4 signifies the mid-point value of
the scale which indicates indifferences and neutrality (Allen and Ng, 1997); 7 role conflict
indicates greatest ambiguity and conflict; and highest commitment to independence.
The results show that the mean score for commitment to independence is higher than
the mid-point value of the scale. This suggests that Malaysian internal auditors 911
believe they have relatively high commitment to independence. In addition, the mean
scores for role ambiguity and role conflict are lower than the mid-point value of the
scale. This result suggests that Malaysian internal auditors experience relatively low
role ambiguity and role conflict. These results are likely to be systematically biased
in a favorable direction due to a halo effect. This bias, provided it is consistent
across the respondents, will not distort the subsequent results of multiple regression
analysis.

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.

n Range Minimum Maximum Mean SD Variance

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.
MAJ References
24,9 Abdul Rahman, R. (2006), Effective Corporate Governance, University Publication Center
(UPENA), Shah Alam.
Ahlawat, S.S. and Lowe, D.J. (2004), An examination of internal auditor objectivity: in-house
versus outsourcing, Auditing: A Journal of Practice & Theory, Vol. 23 No. 2, pp. 147-58.
Alderman, C.W. and Deitrick, J.W. (1982), Auditors perceptions of time budget pressures and
918 premature sign-offs: a replication and extension, Auditing: A Journal of Practice and
Theory, Vol. 1, pp. 53-68.
Allen, P.W. and Ng, C.K. (1997), Financial stake and support for banning trade
names,commissions,referral and contingent fees, American Accounting Association,
Vol. 11 No. 1, pp. 1-6.
Aranya, N. and Ferris, K.R. (1983), Organizational-professional conflict among US and Israeli
professional accountants, The Journal of Social Psychology, Vol. 119, pp. 153-61.
Aranya, N. and Ferris, K.R. (1984), A reexamination of accountants organizational-professional
conflict, The Accounting Review, Vol. 59 No. 1, pp. 1-15.
Aranya, N., Pollock, J. and Amernic, J. (1981), An examination of professional commitment
in public accounting, Accounting, Organizations and Society, Vol. 6 No. 4, pp. 271-80.
Aryee, S., Wyatt, T. and Kheng, M.M. (1991), Antecedents of organizational commitment and
turnover intentions: among professional accountants in different employment settings
in Singapore, The Journal of Social Psychology, Vol. 131 No. 4, pp. 545-56.
Azad, A.N. (1994), Time budget pressure and filtering of time practices in internal auditing:
a survey, Managerial Auditing Journal, Vol. 9, pp. 17-25.
Bamber, E.M. and Iyer, V.M. (2002), Big 5 auditors professional and organizational
identification: consistency or conflict?, Auditing: A Journal of Practice and Theory, Vol. 21
No. 2, pp. 21-38.
Beauchamp, M.R., Bray, S.R., Fielding, A. and Eys, M.A. (2004), A multilevel investigation of the
relationship between role ambiguity and role efficacy in sport, Psychology of Sport and
Exercise, Vol. 6, pp. 289-302.
Cooper, B.J. and Craig, J. (1983), A Profile of Internal Audit in Australia, Royal Melbourne
Institute of Technology, Melbourne.
Cooper, B.J., Leung, P. and Mathews, C.M.H. (1996), Benchmarking a comparison of internal
audit in Australia, Malaysia and Hong Kong, Managerial Auditing Journal, Vol. 11 No. 1,
pp. 23-9.
de Zoort, F.T. and Reisch, J.T. (2000), Incentive-based compensation for internal auditors,
Internal Auditor, Vol. 57 No. 3, pp. 42-6.
Dittenhofer, M. (1997), Behavioural aspects of internal auditing revisited, Managerial Auditing
Journal, Vol. 12 No. 1, pp. 23-7.
Fadzil, F.M., Haron, H. and Jantan, M. (2005), Internal auditing practices and internal control
system, Managerial Auditing Journal, Vol. 20 No. 8, pp. 844-66.
Gouldner, A.W. (1958), Cosmopolitans and locals: towards an analysis of latent social roles,
Administrative Science Quarterly, Vol. 2, pp. 444-80.
Gramling, A.A., Maletta, M.J., Schneider, A. and Church, B.K. (2004), The role of the internal
audit function in corporate governance: a synthesis of the extant internal auditing
literature and directions for future research, Journal of Accounting Literature, Vol. 23,
pp. 194-244.
Griffin, R.W. and Moorhead, G. (2007), Organizational Behavior: Managing People and Effects of role
Organizations, Houghton Mifflin, Boston, MA.
ambiguity and
Grimm, L.G. and Yarnold, P.R. (Eds) (2002), Reading and Understanding More Multivariate
Statistics, American Psychological Association, Washington, DC. role conflict
Hair, J.F., Black, W.C., Babin, B.J., Anderson, R.E. and Tatham, R.L. (2006), Multivariate Data
Analysis, 6th ed., Pearson Prentice Hall, Englewood Cliffs, NJ.
Haron, H., Chambers, A., Ramsi, R. and Ismail, I. (2004), The reliance of external auditors on 919
internal auditors, Managerial Auditing Journal, Vol. 19 No. 9, pp. 1148-59.
Harrell, A., Chewning, E. and Taylor, M. (1986), Organizational-professional conflict and the job
satisfaction and turnover intentions of internal auditors, Auditing: A Journal of Practice
and Theory, Vol. 5 No. 2, pp. 109-21.
Harrell, A., Taylor, M. and Chewning, E. (1989), An examination of managements ability to bias
the professional objectivity of internal auditors, Accounting, Organizations and Society,
Vol. 14 No. 3, pp. 259-69.
(The) High Level Finance Committee on Corporate Governance (2001), Malaysian Code of
Corporate Governance, Malayan Law Journal Sdn Bhd, Petaling Jaya.
IIA (2006), International Standards for the Professional Practice of Internal Auditing,
The Institute of Internal Auditors, Altamonte Springs, FL.
IIAM (2002), Guidelines on Internal Audit Function, The Institute of Internal Auditors Malaysia,
Petaling Jaya.
IIAM (2006), Practice Advisory 1100-1: Independence and Objectivity, The Institute of Internal
Auditors Malaysia, Kuala Lumpur.
IIAM (2006), Professional Practices Framework, The Institute of Internal Auditors Malaysia,
Kuala Lumpur, April.
Kahn, R.L., Wolfe, D.M., Quinn, R.P., Snoek, J.D. and Rosenthal, R.A. (1964), Organizational
Stress: Studies in Role Conflict and Ambiguity, John Wiley & Sons, New York, NY.
Kermis, G.F. and Mahapatra, S. (1985), An empirical study of the effects of time pressure on
audit time allocations, Advances in Accounting, Vol. 2, pp. 261-73.
Knapp, M.C. (1987), An empirical study of audit committee support for auditors involved in
technical disputes with client management, The Accounting Review, Vol. 60, pp. 578-88.
Kulasingham, L.T. (2002), The New Handbook on Corporate Governance, The Institute of
Internal Auditors Malaysia, Petaling Jaya.
Lindsay, D. (1990), An investigation of the impact of contextual factors on Canadian bankers
perceptions of auditors ability to resist management pressure, Advances in International
Accounting, Vol. 3, pp. 71-85.
Mutchler, J.F. (2003), Independence and Objectivity: A Framework for Research Opportunities in
Internal Auditing, The Institute of Internal Auditors, Altamonte Springs, FL.
Mutchler, J., Chang, S. and Prawitt, D. (2001), Independence and Objectivity: A Framework for
Internal Auditors, The Institute of Internal Auditors, Altamonte Springs, FL.
Myers, P.M. and Gramling, A.A. (1997), The perceived benefits of certified internal auditor
designation, Managerial Auditing Journal, Vol. 12 No. 2, pp. 70-9.
Page, M. and Spira, L.F. (2005), Ethical codes, independence and the conservation of ambiguity,
Business Ethics: A European Review, Vol. 14 No. 3, pp. 301-16.
Pei, B.K.W. and Davis, F.G. (1989), The impact of organizational structure on internal auditor
organizational-professional conflict and role stress: an exploration of linkages, Auditing:
A Journal of Practice and Theory, No., Vol. 2, pp. 101-15.
MAJ Peursem, K.V. (2004), Internal auditors role and authority, Managerial Auditing Journal,
Vol. 19 No. 3, pp. 378-93.
24,9 Porter, L.W., Steers, R.M., Mowday, R.T. and Boulian, P.V. (1974), Organizational commitment,
job satisfaction and turnover among psychiatric technicians, Journal of Applied
Psychology, Vol. 59, pp. 603-9.
Rebele, J.E. and Michaels, R.E. (1990), Independent auditors role stress: antecedent, outcome
920 and moderating variables, Behavioral Research in Accounting, Vol. 2, pp. 124-53.
Reynolds, M.A. (2000), Professionalism, ethical codes and the internal auditor: a moral
argument, Journal of Business Ethics, Vol. 24 No. 2, pp. 115-24.
Rizzo, J.R., House, R.J. and Lirtzman, S.I. (1970), Role conflict and ambiguity in complex
organizations, Administrative Science Quarterly, Vol. 15 No. 2, pp. 150-63.
Sawyer, L.B. and Dittenhofer, M.A. (1996), Sawyers Internal Auditing: The Practice of Modern
Internal Auditing, The Institute of Internal Auditors, Altamonte Springs, FL.
Schneider, A. (2003), An examination of whether incentive compensation and stock ownership
affect internal auditor objectivity, Journal of Managerial Issues, Vol. XV No. 4, pp. 486-97.
Senatra, P.T. (1980), Role conflict, role ambiguity and organizational climate in a public
accounting firm, The Accounting Review, Vol. 55 No. 4, pp. 594-603.
Sorensen, J.E. (1967), Professional and bureaucratic organization in the public accounting firm,
The Accounting Review, pp. 553-65.
Sorensen, J.E. and Sorensen, T.L. (1974), The conflict of professionals in bureaucratic
organizations, Administrative Science Quarterly, Vol. 59, pp. 98-106.
Vanasco, R.R. (1994), The IIA code of ethics: an international perspective, Managerial Auditing
Journal, Vol. 9 No. 1, pp. 12-22.
Vinten, G. (1999), Auditor independence in the UK the state of the art, Managerial Auditing
Journal, Vol. 14 No. 8, pp. 408-37.
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

(a) clear guidelines on high risk areas. 1 2 3 4 5 6 7

(b) clear authorization policies for transactions. 1 2 3 4 5 6 7

(c) clear written policies which describe prohibited 1 2 3 4 5 6 7


activities.

(d) clear policies which describe the action


1 2 3 4 5 6 7
required whenever violations are discovered.

(e) clear policies and guidelines on system 1 2 3 4 5 6 7


operations and testing.

B. Strongly Strongly
Disagree Agree
I am always clear on what has to be done:

(a) for internal control assessment. 1 2 3 4 5 6 7

(b) when wrong doing is discovered. 1 2 3 4 5 6 7

(c) when irregularities are discovered. 1 2 3 4 5 6 7

(d) when weaknesses are discovered. 1 2 3 4 5 6 7

(continued)
MAJ C. Strongly Strongly
24,9 My authority is well understood in relation to: Disagree Agree

(a) reviewing and commenting on reports from


managers at various levels in the organization 1 2 3 4 5 6 7
922 responsible for authorizing the payment of
funds.

(b) reviewing transactions that are approved


1 2 3 4 5 6 7
at the executive level.

(c) having access to actions of the board of directors. 1 2 3 4 5 6 7

D. Strongly Strongly
Disagree Agree
I know what my responsibilities are when:

(a) internal control system is assessed. 1 2 3 4 5 6 7

(b) wrong doing is discovered. 1 2 3 4 5 6 7

(c) irregularities is discovered. 1 2 3 4 5 6 7

E.
Strongly Strongly
There is no doubt about what the internal audit Disagree Agree
standards want me to do in-respect of:

(a) discovery of internal control weaknesses. 1 2 3 4 5 6 7

(b) discovery of wrongdoing. 1 2 3 4 5 6 7

(c) discovery of irregularities. 1 2 3 4 5 6 7

F.
Strongly Strongly
Disagree Agree
I believe my time is divided properly in the tasks of:

(a) evaluating internal control weaknesses. 1 2 3 4 5 6 7

(b) investigating wrongdoing. 1 2 3 4 5 6 7

(c) investigating irregularities. 1 2 3 4 5 6 7


SECTION 2 Effects of role
The statements listed below will describe some specific characteristics about your
ambiguity and
AUDIT FUNCTION. role conflict
Using the scale below, please circle the number that corresponds with how true each
statement is for your AUDIT FUNCTION.
923
A. Strongly Strongly
Disagree Agree

1. There are things I sometimes have to do that are


accepted by management but not accepted by my 1 2 3 4 5 6 7
profession.

2. I have to disregard certain professional ethical


standards and agree to management request when 1 2 3 4 5 6 7
reporting wrongdoing.

3. I have to disregard certain professional ethical


standards and agree to management request when 1 2 3 4 5 6 7
reporting weaknesses.

4. I have to disregard certain professional ethical


standards and agree to management request when 1 2 3 4 5 6 7
reporting irregularities.

5. My firms work procedures and practices


sometimes deviate from the standard practices of 1 2 3 4 5 6 7
the profession.

B. Strongly Strongly
Disagree Agree

1. I would feel the pressure of conflict of interest if


required to work under both an audit role and 1 2 3 4 5 6 7
advisory services role.

2. I prefer to focus on audit role and not be involved 1 2 3 4 5 6 7


in any advisory role.

3. I have a problem in performing both the audit and 1 2 3 4 5 6 7


advisory role as required by my profession.

(continued)
MAJ C. Strongly Strongly
24,9 Disagree Agree
I sometimes have to do things that:

(a) should not be done that way. (e.g illegal) 1 2 3 4 5 6 7

924 (b) are against my own principle. (e.g unethical) 1 2 3 4 5 6 7

(c) are very difficult for me to exercise.


(e.g. firing colleague) 1 2 3 4 5 6 7

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

1. I am willing to put in a great deal of effort beyond


that normally expected in order to ensure 1 2 3 4 5 6 7
dedication to independence.

2. I would resist almost any type of pressures in order


1 2 3 4 5 6 7
to maintain independence.

3. I would take very little change in my present


circumstances to cause me to neglect 1 2 3 4 5 6 7
independence concept.

B. Strongly Strongly
Disagree Agree

1. Theres not too much tobe gained by sticking with


independence and by avoiding conflict of interest 1 2 3 4 5 6 7
situations.

2. Deciding to adhere to independence value was a 1 2 3 4 5 6 7


definite mistake on my part.

3. I feel very little loyalty to the concept of 1 2 3 4 5 6 7


independence.

(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.

3. I talk up exercising independence to my friend as 1 2 3 4 5 6 7


a great thing to do.

4. I am proud to tell others that I amindependent. 1 2 3 4 5 6 7

About the authors


Zaini Ahmad MAcc, CA, is a Lecturer in accounting at the Faculty of Accountancy, Universiti
Teknologi MARA, Shah Alam, Malaysia. She worked as an external auditor before joining the
university. She is the author of an auditing book. Her areas of interest are mainly on auditing and
corporate governance.
Dennis Taylor PhD, CA, is a Professor in accounting at RMIT University. Previous
professorial posts have been at University of South Australia, The University of Adelaide, Curtin
University and City University of Hong Kong. He has also been an accountant and financial
analyst in the banking industry. He is the author of four books and numerous journal articles in
areas of corporate financial reporting, public sector accountability and management accounting
systems. He consults mainly to public sector organizations. Dennis Taylor is the corresponding
author and can be contacted at: dennis.taylor@rmit.edu.au

To purchase reprints of this article please e-mail: reprints@emeraldinsight.com


Or visit our web site for further details: www.emeraldinsight.com/reprints

Potrebbero piacerti anche