International Journal of Financial Management

Open Access Open Access  Restricted Access Subscription Access
Open Access Open Access Open Access  Restricted Access Restricted Access Subscription Access

Compliance of External Auditors with the Professional Code of Conduct: A Case Study of Ethiopia


Affiliations
1 Head, Accounting & Finance Program Unit, School of Commerce, CoBE, Addis Ababa University, Ethiopia., Ethiopia
2 George Washington University, United States, United States
     

   Subscribe/Renew Journal


The objective of the study was to assess the compliance of external auditors with the code of conduct while discharging their responsibilities, and its effect on the existence of CSR within client organisations in the case of Ethiopia. The study adopted a mixed research approach; cluster sampling was used to categorise the respondents based on their role within the organisation, and probability sampling was used to select the respondents. The findings show that client’s demand for unqualified opinion, pressure from clients to get auditor’s report as soon as possible, strong personal or financial relationship, and manager’s refusal to provide necessary information are some of the constraints that affect external auditor’s compliance with the code of ethics while they perform their activities. Similarly, manager’s doubt that auditor’s report might affect their future, manager’s fear of losing their job, and management’s intention to hide their mistakes are the reasons for management not to provide the necessary information to external auditors. External auditors and management of client organisations should comply with the principles of CSR at a maximum level when they perform their business activities; external auditors should understand that their compliance with the code of conduct is basic to protect the public from corrupt organisations. There should be a strong professional association or authority that controls external auditor’s competence and the compliance of their work with the code of conduct, and management should present all the necessary information.

Keywords

Corporate Social Responsibility, External Auditor, Management, Professional Code, Business Ethics
Subscription Login to verify subscription
User
Notifications
Font Size

  • Alemu, D. D. (2017). The impact of corporate social responsibility practices on financial performance of banking sector in ethiopia. Global Journal of Managment and Business Research: (D) Accounting and Auditing, 17(1), 30-34.

  • Arens, A. A., Elder, R. J., & Beasley, M. S. (2012).Auditing and assurance services: An integrated approach (14th ed.). New Jersey: Pearson Education.

  • Assye, E. (2016). The impact of provision of NAS to audit clients on auditors independency and audit quality.

  • Ayele, G. (2019). Auditor’s professional responsibilities and legal liability with regard to private auditors in Ethiopia.

  • Beyene, M. (2007). Auditors Professional responsibilities and legal liability with regard to private auditors in Ethiopia. Addis Ababa.

  • Caroll, A. B. (1991). The pyramid of corporate social responsiblity: To ward the moral managment of organizational shareholders. Business Horizon, 3-10.

  • Feleke, B. T. (2017). Auditors perception of audit quality in Ethiopia. Addis Ababa University.

  • Ferreire, J. V. (2018). The role of the external auditor in corporate governance: The case of companies listed in the Euro next.

  • Government of Ethiopia. (1960). Commercial code of the empire of Ethiopia, (Proclamation No. 166/1960).

  • Government of Ethiopia. (1997). Establishment of office of federal auditor general.

  • Gudich, S. W. (2016). Determinants of perceptions of external auditors independence in Ethiopian private audit firms. Retrieved from http://etd.aau.edu.et/ handle/123456789/5039

  • Kinfu, P. Y. (1990). Accounting and auditing in Ethiopia: An historical perspective. Paper presented to the first national Conference of Ethiopian Studies. Addis Ababa.

  • Kitata, S. (2016). Factors affecting quality of external auditing: The case of Ethiopian commercial banks. Retrieved from http://etd.aau.edu.et/ handle/123456789/5166

  • OFAG. (2009). Ethiopian code of ethics for professional accountant. Addis Ababa.

  • OFAG. (2004). OFAG code of ethics for authorized auditors.

  • Oseni, A. I. (2011). Unethical behavior by professional accountant in an organization. Research Journal of Finance and Accounting, 2(2).

  • Salehi, M. (2011). Non-audit service and audit independence: Evidences from Iran. International Journal of Business and Management, 4(2).

  • Soltani, B. (n.d.). Auditing: An international approach. Pearson Education.

  • Terikhan, M., Ahemed Khan, N., Ahmed, S., & Ali, M.(2012). Corporate social responsiblities – Defnition, concepts and scope.

  • Watkins, A. L., Hillison, W., & Morecroft, S. E. (2004).Audit quality: A synthesis of theory and empirical evidence. Journal of Accounting Literature, 23, 153.

  • World Bank. (2007). Report on the observance of standards and codes (ROSC) Ethiopia. Retrieved from http://www.worldbank.org/ifa/rosc_aa_ethiopia.pdf

  • Wudu, A. (2014). Auditor responsibility and fraud detection. Addis Ababa.


Abstract Views: 169

PDF Views: 0




  • Compliance of External Auditors with the Professional Code of Conduct: A Case Study of Ethiopia

Abstract Views: 169  |  PDF Views: 0

Authors

Dakito Alemu Kesto
Head, Accounting & Finance Program Unit, School of Commerce, CoBE, Addis Ababa University, Ethiopia., Ethiopia
Abraham Bayeh
George Washington University, United States, United States

Abstract


The objective of the study was to assess the compliance of external auditors with the code of conduct while discharging their responsibilities, and its effect on the existence of CSR within client organisations in the case of Ethiopia. The study adopted a mixed research approach; cluster sampling was used to categorise the respondents based on their role within the organisation, and probability sampling was used to select the respondents. The findings show that client’s demand for unqualified opinion, pressure from clients to get auditor’s report as soon as possible, strong personal or financial relationship, and manager’s refusal to provide necessary information are some of the constraints that affect external auditor’s compliance with the code of ethics while they perform their activities. Similarly, manager’s doubt that auditor’s report might affect their future, manager’s fear of losing their job, and management’s intention to hide their mistakes are the reasons for management not to provide the necessary information to external auditors. External auditors and management of client organisations should comply with the principles of CSR at a maximum level when they perform their business activities; external auditors should understand that their compliance with the code of conduct is basic to protect the public from corrupt organisations. There should be a strong professional association or authority that controls external auditor’s competence and the compliance of their work with the code of conduct, and management should present all the necessary information.

Keywords


Corporate Social Responsibility, External Auditor, Management, Professional Code, Business Ethics

References