Behavioral Aspect Of Auditing And The Impact Of Culture - Sample

Question: Discuss about the Behavioral Aspect Of Auditing And The Impact Of Culture And Ethnicity On Auditor Decision Making. Answer: Introduction Ethics is something that is very much related to the general well being of people. It needs the knowledge of moral ideals, beliefs, faith and principles to apply them to problems and decisions. Ethics also plays a major role in todays scenario not only in the field of families but also in the field of business as well. Auditing is such a field that needs the implementation of ethics at every step. Ethical auditing is something that will help the companies to establish clear guidelines about the acceptable behaviors that are acknowledged worldwide. Nowadays, the consumer power also plays a major role in initiating the companies to behave and work ethically. In particular (Hazelton, 2013). Auditing is such a profession that needs the application of ethics at every aspect. An auditor is someone who works for making the other companies run smoothly. It works to make the revenue and finance of the other set ups to work properly and finds out any fraudulent activities taking place within any company. Being an auditor is no easy job. Apart from consulting, one has to know the ethical limitations to which one as to limit oneself. Auditing is used in any and every field starting from any bank, college, multinational companies or even zoo. The Auditors who are in charge of the animal welfare here will have to give the animals a real life experience which will include compromising animals such as socially difficult animals, injured animals, lone animals etc. A blind animal was given the positive welfare response by the zoo officials as it apparently behaved like it's sighted species but something troubled the auditors because they realized that the animal was not living as it should have lived in its natural surroundings, its identity had been taken away. Though the standard was working soundly the auditors brought to the existing system a personal belief system based on their past experiences in animal welfare, species management etc. Literature review There is nothing new about ethical behavior in business (Abdol et al.,2017). There must be an ethical approach towards decision making. Individuals usually act in order to achieve something that they consider as good and valued. There are different ethics for different objectives. The auditors need to frame out the objectives first and then act accordingly. If the motive is to serve the society, the ethics to be used must be one and it will be different if the motif is to perform a duty. There is often a conflict between the morals, ethics and the consequences. But the auditors must be able to work according to their moral and their ethics irrespective of the outcome or the fear of the consequences (Raiborn et al.,2017). International business and ethics The MNCs face severe issues with ethical auditing. The big companies are well aware of the added risks that they might face. They are often haunted by this thought that how to work in countries where corruption has delved deep. (Helin Babri, 2015). It is here the role ethical auditing comes in. The only thing is to make the framework of values operate equally and consistently everywhere. An ethical audit measures the cultures and behaviors of an organization and also promotes a positive ethical environment throughout the organization. It helps in creating a high level of job satisfaction, a strong awareness of the policies of equality and diversity and also instills the values of responsibility within all the employees of an organization. Ethics is not about doing what is legally right but also about what is morally right. Figure1: ethical auditing helping to fight fraudulent activities in companies (Source: www.cpaaustralia.com.au.2016) Nowadays there are major chances of malpractices that people do because of their own personal gain. One of the major issues that ethical auditing can fight with is that of corruption. Another aspect that the ethical auditing can deal with is that of consumer power which is now affecting the companies a great deal. The ethical audit will help the company to assess the risks that the consumer pressure groups can create. This will also enable the companies to identify and develop their relationship with their different stakeholders. The organization must be able to formulate its own set of values and formulate it within the organization before the outsiders do the same. This needs openness among the values and consistency between them. The company must make sure that the relationship between itself and all the stakeholders are transparent and this is achieved if the stakeholders are clearly aware of the values of the company. Since ethical auditing is based on the behavior of every individual, a thorough check must be given on the activities of each worker. Ethical auditing of the finances involves auditing the entire revenue of the firm from the clear records given by the book keeping systems of the company. https://www.cpaaustralia.com.au/professional-resources/ethics https://marstongroup.co.uk/ethics-and-governance/transparency/ https://exemplarglobal.org/blog/ethics-in-auditing/ The question that arises is whether the ethical auditing will be helpful in reducing the corruption that exists in large quantity within the companies (Narwal Singh, 2013). The main reason behind corruption is the conflict of interest. Ethical auditing works towards initiating transparency and making the values of the company making the values of the company known to one and all. This, in turn, will make the employees involved in the business decisions and will make them feel valued and thus this practice can aim towards reducing the chances of corruption. Figure2: fraud risk model (Source: marstongroup.co.uk.2015) Conclusion Ethical auditing thus aims at making the company run smoothly and will help in exposing both the vulnerabilities and values at the same time and this has several benefits for the MNCs, it will enable them to enter into partnership relations with the important companies from across the world who would otherwise have several conflicting value system. But ethical auditing still has to go a long way and undergo several developments as it is still in its level of infancy. References Abdolmohammadi, M. J., DeSimone, S. M., Hsieh, T. S., Wang, Z. (2017). Factors associated with internal audit function involvement with XBRL implementation in public companies: An international study.International Journal of Accounting Information Systems,25, 45-56. Hazelton, J. (2013). Accounting as a human right: the case of water information.Accounting, Auditing Accountability Journal,26(2), 267-311. Helin, S., Babri, M. (2015). Travelling with a code of ethics: a contextual study of a Swedish MNC auditing a Chinese supplier.Journal of Cleaner Production,107, 41-53. Narwal, M., Singh, R. (2013). Corporate social responsibility practices in India: a comparative study of MNCs and Indian companies.Social Responsibility Journal,9(3), 465-478. Raiborn, C., Butler, J. B., Martin, K., Pizzini, M. (2017). The Internal Audit Function: A Prerequisite for Good Governance.Journal of Corporate Accounting Finance,28(2), 10-21.