Activating auditors’ honesty and moral reasoning


Audit quality is dependent on the technical skills of the auditor and the quality of the audit word performed but also on the ethical and social merit of the auditors’ decisions. The researchers postulate that audit quality can be improved to the extent that social norms for honesty and responsibility are activated in the auditor. They tested this assertion in an experimental setting in which they manipulated factors expected to activate honesty and responsibility norms in the auditor.


The scholars find that auditor misreporting is reduced when the investor is another participant in the experiment rather than computer simulated, and thus, the interests of third-party investors are salient to the auditor. They also conclude that auditor misreporting is reduced when the auditor is required to sign-off on the audit report, but only when the investor is another participant in the experiment. Additionally, they find that pre-experimental measures of sensitivity to honesty and responsibility norms help explain the results, and finally, they find that these measures of social norm sensitivity are associated with the moral judgment that auditor misreporting is unethical.


Our study helps explain previous anomalous findings in the literature and answers the call in Blay et al. (J Bus Ethics 2017. doi: 10.1007/s10551-016-3286-4) for empirical researchers to use social norm theory to develop stronger tests of moral reasoning in the market for auditing services.


Blay, A.D., Gooden, E.S., Mellon, M.J. et al. J Bus Ethics (2017).


Expert Opinion Jim Emanuels

This research is in a way an extension of the research of the mid and late nineties of the last century, on the moral reasoning of auditors. I published my phd. thesis in 1995 titled: “auditors’ decisions in situations of conflict".

The study of the factors that influence the auditor's ability to withstand clients pressure in situations of conflicting interests, has been based on integrated models of ethical decision-making. Given the pressures exercised from situational circumstances, professional integrity in these models is very much determined by the auditor’s personal characteristics. One of the relevant characteristics that has been subject of my research is the level of moral development: a standard for the type of considerations of individuals in ethical decision-making conflict with decision-making, that is all about judging what is right and wrong. We call this the moral judgement process, and moral judgement refers to the capability of individuals to weigh the consequences of decisions for others and to assign priorities to interests at stake. Moral reasoning is the process leading to a moral judgement, such as an auditors’ decision in a situation of conflicting interests. The research on moral reasoning builds on Kohlberg’s (1984) theory of Moral development.


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My experimental research supported the idea that in the end the willingness of auditors to support the auditee in conflicts of interest is pretty dominant. In addition, a relationship was discovered between the decisions of the auditors and the type of considerations that they apply. The decision not to support the auditee was rather often accompanied with considerations referring to legislation and regulations, in contrast to decisions to support the auditee, which were most often accompanied with considerations referring to the fact that the interests of all parties involved suffered no major damage.

In the case in which a clear and serious violation of rules was suggested by the auditee and in with the auditee was also capable to put great pressure on the auditor (for example by threats of auditor change), it was found that the authors referring to consideration from the ethical domain (with a higher level of more reasoning) more often refused to go along with the auditee than auditor referring to other considerations. These other considerations include pressure from peers (colleagues), empathy for the troublesome situation of the client, and the risk of financial loss for the auditor and audit form. These are arguments link to Kohlberg’s level 2 and 3 of the moral reasoning scale. The level at which right and wrong are mostly dependent on what is acceptable by peers and looking after primarily one’s own interests and the interests of one’s social committee. This is the level of moral reasoning of the average auditor in my research.

Looking at the research from Blay et al, it makes sense that knowing an investor and having him/her at the table while singing the audit report will have more impact on this average auditor. On a more generic level, it is also for this reasons that it is functional to have auditors participate in the public debate with stakeholders at all levels; stakeholders of the individual client, as well as stakeholders representing specific industries or interests. Knowing your stakeholders and their interests is at least as important as knowing your clients; in fact, your stakeholders are your clients.

Another way to affect a more informative position of stakeholders, and by doing so, reducing the opportunities for auditors to make unbalanced decision both from a technical and ethical point of view, is the introduction of the enhanced auditor's report standards by the International Auditing and Assurance Standards Board in 2015.


  • Emanuels,  Auditors Considerations in Situation of Conflict, PHD Thesis, Amsterdam, Thesis Publishers, 1995.
  • IAASB, 2015, see 
  • Kohlberg, L., The psychology of moral development. San Francisco: Harper & Row, 1984


Edited by Eline Ammeraal


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