The Need for Ethics Audit: Its Relevance and Importance in Government Organizations (Case Study of Indonesian Government)
DOI:
https://doi.org/10.21776/ijabs.2023.31.3.700Keywords:
ethics, audit, relevance, government governanceAbstract
Purpose—This paper aims to explore the emergent discourse of ethics audit and advance the relevance and importance of ethics audit as an effective way of maintaining an ethical climate in Indonesian government organizations.
Design/Methodology/Approach—This study uses a qualitative approach with Constructivism-Grounded Theory (CGT) analysis to gather field data and find, explore, and formulate findings. CGT is used because the conceptual foundation regarding ethics audit is still developing.
Findings—The findings obtained are that the ethics audit proposed in this study is significantly relevant to creating a better ethical climate in government organizations in Indonesia. The relevance involves an analysis of 3 perspectives, namely the micro, meso, and macro levels. The ethics audit model is proposed to provide a design for action in mitigating ethics violations, a framework to achieve good government governance, and a strategy for governing integrated continuous auditing.
Practical Implication—In a situation where the issue of public officials' ethics is being seriously highlighted in society, this study promotes the importance of ethics audits to government organizations. It is hoped that ethics audits will be legitimized as annual practices like the predecessor audits that already exist.
Originality/Value—This study fills the void of the limited discourse on ethics audits in Indonesia. Findings from this research raise the government’s awareness to be more serious about ethics through ethics audits.
References
Agheorghiesei, D. T., Iliescu, L., Cristina Gavrilovici, & Oprea, L. (2013). What Is To Be Expected from An Ethics Audit Integrated Within the Accreditation Process of Hospitals from Romania? Iran Journal Public Health, 42(7), 737–747.
Ahmed, J. (2019). Ethics Audit: 9 Steps to Audit and Monitor an Ethical Culture. Audit Board.
AICPA. (2002). Status Report: The Recommendations of the Panel on Audit Effectiveness , As of February 15 , 2002.
Amundsen, I., & Andrade, V. P. de. (2009). Public sector ethics. Luanda and Bergen.
Anderson, U. L., Christ, M. H., Johnstone, K. M., & Rittenberg, L. E. (2012). A post-SOX examination of factors associated with the size of internal audit functions. Accounting Horizons, 26(2), 167–191. https://doi.org/10.2308/acch-50115
Ashkanasy, N. M., & Callan, V. J. (2000). Predictors of Ethical Code Use and Ethical Tolerance in the Public Sector. 237–253.
Bairaktarova, D., & Woodcock, A. (2017). Engineering Student’s Ethical Awareness and Behavior: A New Motivational Model. Science and Engineering Ethics, 23(4), 1129–1157. https://doi.org/10.1007/s11948-016-9814-x
Butterfield, K. D., Trevino, L. K., & Weaver, G. R. (2000). Moral Awareness in Business Organizations: Influence of Issue-related and Social Context Factors. Human Relations, 53(7), 981–1018.
Carcello, J. V., Eulerich, M., Masli, A., & Wood, D. A. (2017). The Value to Management of Using the Internal Audit Function as a Management Training Ground. Accounting Horizon, 32(2). https://doi.org/10.2139/ssrn.2691535
Christ, M. H., Eulerich, M., Krane, R., & Wood, D. A. (2021). New Frontiers for Internal Audit Research*. Accounting Perspectives, 20(4), 449–475. https://doi.org/10.1111/1911-3838.12272
Coram, P., Ng, J., & Woodliff, D. (2003). A survey of time budget pressure and reduced audit quality among australian auditors. Australian Accounting Review, 13(29), 38–44. https://doi.org/10.1111/j.1835-2561.2003.tb00218.x
Cowell, R., Downe, J., & Morgan, K. (2014). Managing Politics? Ethics Regulation and Conflicting Conceptions of “Good Conduct.” Public Administration Review, 74(1), 29–38. https://doi.org/10.1111/puar.12135
Detik. (2018, September). Perjalanan kasus korupsi 41 anggota DPRD Malang hingga PAW masal. Retrieved from https://news.detik.com/berita/d-4206487/perjalanan-kasus-korupsi-41-anggota-dprd-malang-hingga-paw-massal
Detik. (2019). Menyelamatkan (dana) desa. Retrieved from https://news.detik.com/kolom/d-4447923/menyelamatkan-dana-desa?_ga=2.15717363.417634871.1556174317-1769019465.1556174317
Dillard, J. F., & Yuthas, K. J. (2013). Ethics in Action : An application of structuration theory in professional service firms. Business Administration Faculty Publications and Presentation.
Dimitrijevic, D., Jovkovic, B., & Milutinovic, S. (2020). The scope and limitations of external audit in detecting frauds in company’s operations. Journal of Financial Crime, 28(3), 632–646. https://doi.org/10.1108/JFC-11-2019-0155
Downe, J., Cowell, R., & Morgan, K. (2016). What Determines Ethical Behavior in Public Organizations: Is It Rules or Leadership? Public Administration Review, 76(6), 898–909. https://doi.org/10.1111/puar.12562
DuFrene, D. D. (2001). The External Ethics Audit: A Guided Experience in Self-Directed Web Inquiry. Teaching Business Ethics, 5(1), 71. Retrieved from http://search.proquest.com/docview/211826338?accountid=14549%5Cnhttp://hl5yy6xn2p.search.serialssolutions.com/?genre=article&sid=ProQ:&atitle=The+External+Ethics+Audit:+A+Guided+Experience+in+Self-Directed+Web+Inquiry&title=Teaching+Business+Ethics&issn=1
Endaya, K. A. (2014). Coordination and Cooperation Between Internal and External Auditors. Research Journal of Finance and Accounting, 5(9), 76–81.
Eurosai. (2017). Audit of Ethics in Public Sector Organisations. Retrieved from www.eurosai-tfae.tcontas.pt
Fleming, S., & McNamee, M. (2005). The ethics of corporate governance in public sector organizations. Public Management Review, 7(1), 135–144. https://doi.org/10.1080/1471903042000339455
Fowzia, R. (2010). Co-operation between Internal and External Auditors: A Comparative Study on Nationalized and Foreign Banks in Bangladesh. World Journal of Management, 2(2), 22–35.
Francis, R., & Elliot, R. (1996). Corporate governance and ethics: An update. The Practising Manager.
Frunză, A. C. (2014). Perspectives for Reconstruction of Ethical Expertise. Postmodern Openings, 5(2), 81–96.
García-marzá, D. (2017). From Ethical Codes to Ethical Auditing: An Ethical Infrastucture for Social Responsibility Communication. El Profesional de La Information, 26(2), 268–276.
García-Marzá, D. (2005). Trust and dialogue: Theoretical approaches to ethics auditing. Journal of Business Ethics, 57(3), 209–219. https://doi.org/10.1007/s10551-004-8202-7
Gołębiowska, A., Prokopowicz, D., & Wolańczyk, A. (2022). Internal Audit and Management Control in Units of the Public Finance Sector. Zeszyty Naukowe SGSP, 82(June), 115–140. https://doi.org/10.5604/01.3001.0015.8884
Graham, G. (2004). Eight Theories of Ethics. London and New York: Routledge.
Gramling, A. A., Schneider, M. J., & Church, B. K. (2004). The Role of Internal Audit Function in Corporate Governance: A Synthesis of the Extant Internal Auditing Literature and Directions for Future Research. Journal of Accounting Literature, 23.
Gray, S. T. (1996). Audit your ethics. Association Management.
Greenberg, J. (2002). Who stole the money , and when ? Individual and situational determinants of employee theft. Organizational Behavior and Human Decision Process, 89, 985–1003.
Hambali. (2013). Audit Kinerja Sektor Publik. In Cakrawala Perubahan: Merangkai Gagasan, Kebijakan dan Harapan. UNG Press.
Hardman, D. J. (1996). Audit of Ethics in Government. International Journal of Government Auditing.
Hegarty, W. H., & Sims, H. P. (1978). Some Determinants of Unethical Decision Behavior: An Experiment. Journal of Applied Psychology, 63(4), 451–457.
Jeune, M. Le, & Webley, S. (1998). Company Use of Code of Business Conduct.
Jones, G. E., & Kavanagh, M. J. (1996). An Experimental Examination of the Effects of Individual and Situational Factors on Unethical Behavioral Intentions in the Workplace. Journal of Busines Ethics, 15, 511–523. https://doi.org/10.1007/978-94-007-4126-3_33
Jordan Srour, F., & Yorke-Smith, N. (2018). On collusion and coercion: Agent interconnectedness and in-group behaviour. Proceedings of the International Joint Conference on Autonomous Agents and Multiagent Systems, AAMAS, 3, 1622–1630.
Kaptein, M. (1998). Ethics management: Auditing and developing the ethical content of organization (Ten). Springer Science and Business Media Dordrecht.
Kinnon, M. (2008). Ethics: Theory and Contemporary Issues. Belmont: Wadsworth.
Kompas. (2017, September). Hingga September 2017, 5 kepala daerah terjaring OTT KPK, siapa saja mereka? Retrieved from https://nasional.kompas.com/read/2017/09/19/07000031/hingga-september-2017-5-kepala-daerah-terjaring-ott-kpk-siapa-saja-mereka?page=all%0A%0A
Kompas. (2018, September). Kasus korupsi massal di DPRD Kota Malang, ini sejumlah faktanya. Retrieved from https://regional.kompas.com/read/2018/09/04/15100021/kasus-korupsi-massal-di-dprd-kota-malang-ini-sejumlah-faktanya?page=all
Kontogeorgis, G. (2018). The Role of Internal Audit Function on Corporate Governance and Management. International Journal of Accounting and Financial Reporting, 8(4), 100. https://doi.org/10.5296/ijafr.v8i4.13626
LAN. (2017). Penyalahgunaan Wewenang Karena Kurangnya Etika Penyelenggara Negara.
Langseth, P. (2006). Measuring Corruption. In Measuring Corruption.
Lewis, C. W. (1992). An agency ethics audit. International Journal of Public Administration, 15(8), 1619–1632. https://doi.org/10.1080/01900699208524776
Löfström, E. (2012). Students’ Ethical Awareness and Conceptions of Research Ethics. Ethics and Behavior, 22(5), 349–361. https://doi.org/10.1080/10508422.2012.679136
Ludigdo, U. (2007). Paradoks etika akuntan. Yogyakarta: Pustaka Pelajar.
Ma’ayan, Y., & Carmeli, A. (2015). Internal Audits as a Source of Ethical Behavior, Efficiency, and Effectiveness in Work Units. Journal of Business Ethics, 137(2), 347–363. https://doi.org/10.1007/s10551-015-2561-0
Margheim, L., Kelley, T., & Pattison, D. (2005). An empirical analysis of the effects of auditor time budget pressure and time deadline pressure. Journal of Applied Business Research, 21(1), 23–35. https://doi.org/10.19030/jabr.v21i1.1497
Martin, O., & Smith, B. (2012). Ethics, Risk, Governance and Fraud. Fasset.
McAuliffe, D. (2005). Putting ethics on the organisational agenda: The social work ethics audit on trial. Australian Social Work, 58(4), 357–369. https://doi.org/10.1111/j.1447-0748.2005.00232.x
McNamee, M. J., & Fleming, S. (2007). Ethics Audits and Corporate Governance : The Case of Public Sector Sports Organizations and Corporate of ethically. Journal of Business Ethics, 73(4), 425–437. https://doi.org/10.1007/sl0551-006-9216-0
Metzger, M., Dalton, D. R., Hill, J. W., Business, S., Quarterly, E., Jan, N., … Hill, W. (1993). The organization of ethics and the ethics of organizations : The case for expanded organizational ethics audits. Business Ethics Quarterly, 3(1), 27–43.
NAO. (2000). Co‐operation between internal and external auditors: A good practice guide. London: HM Treasury and National Audit Office.
Ojasoo, M. (2016). CSR reporting, stakeholder engagement and preventing hypocrisy through ethics audit. Journal of Global Entrepreneurship Research, 6(1). https://doi.org/10.1186/s40497-016-0056-9
Paine, L. S. (1994). Managing for organizational integrity. Harvard Business Review.
Pearsall, M. J., & Ellis, A. P. J. (2011). Thick as Thieves : The Effects of Ethical Orientation and Psychological Safety on Unethical Team Behavior. Journal of Applied Psychology, 96(2), 401–411. https://doi.org/10.1037/a0021503
Perry, J. L., De Graaf, G., Van der Wal, Z., & Van Montfort, C. (2014). Returning to Our roots: “good government” evolves to “good governance.” Public Administration Review, 74(1), 27–28. https://doi.org/10.1111/puar.12164
Rezaee, Z. (2004). Restoring public trust in the accounting profession by developing anti‐fraud education, programs, and auditing. Managerial Auditing Journal, 19(1), 134–148. https://doi.org/10.1108/02686900410509857
Rihma, M, & Meel, M. (2013). The discrepancy between declared values and real ethical behavior of companies (Estonian Case). European Scientific Journal, 9(16), 26–42.
Rihma, Merle. (2014). Ethics Audit: A Management Tool for Assessing of Corporate Social Responsibility and Preventing Ethical Risk.
Rihma, Merle, Lorenz, B., Meel, M., & Leppiman, A. (2014). Implementing ethics auditing model: New approach. Scientific Papers (Www.Scientificpapers.Org) Journal of Knowledge Management Economics and Information Technology, 1(4), 1–19.
Rothstein, B. (2003). Social capital, economic growth and quality of government: The causal mechanism. New Political Economy, 8(1), 49–71. https://doi.org/10.1080/1356346032000078723
Rothstein, B., & Stolle, D. (2003). Introduction: Social capital in Scandinavia. Scandinavian Political Studies, 26(1), 1–26. https://doi.org/10.1111/1467-9477.t01-1-00077
Salminen, A., & Ikola-Norrbacka, R. (2010). Trust, good governance and unethical actions in Finnish public administration. International Journal of Public Sector Management, 23(7), 647–668. https://doi.org/10.1108/09513551011078905
Schaefer, A. G., & Swenson, L. (2005). Contrasting the vision and the reality : Core ethical values , ethics audit and ethics decision models for attorneys. Pepperdine Law Review, 32(2), 459–481.
Schwartz, M. S. (2002). A code of ethics for corporate code of ethics. Journal of Busines Ethics, 41, 27–43. https://doi.org/10.1029/2004eo160010
Shakeel, A., Rasheed, B., Ahmed, M., & Bakhsh, A. (2020). Effectiveness of the Role of Internal Audit Function: A Perception of External Auditors of Pakistan. Paradigms, SI(1), 75–80. https://doi.org/10.24312/20000112
Soltani, B. (2014). The Anatomy of Corporate Fraud: A Comparative Analysis of High Profile American and European Corporate Scandals. Journal of Business Ethics, 120(2), 251–274. https://doi.org/10.1007/s10551-013-1660-z
The Institute of Internal Auditors. (2012). International Professional Practices Framework (IPPF). Florida.
The Institute of Internal Auditors. (2018). Internal Auditing’s Role in Corporate Governance. The Institute of Internal Auditors, 1–4. Retrieved from https://na.theiia.org/about-ia/PublicDocuments/Internal-Auditings-Role-in-Corporate-Governance.pdf
Verschoor, C. C. (1998). A study of the link between a corporation’s financial performance and its commitment to ethics. Journal of Business Ethics. https://doi.org/10.1023/A:1006020402881
Waggoner, J., & Cashell, J. (1991). The Impact of Time Pressure on Auditors’s Perfomance. The Ohio CPA Journal, 27–32.
Weins, S., Alm, B., & Wang, T. (2016). Rethinking The Future of Auditing: How an Integrated Continuous Auditing Approach Can Leverage the Full Potential of Continuous Auditing. ZBW - Deutsche Zentralbibliothek Für Wirtschaftswissenschaften, Leibniz-Informationszentrum Wirtschaft, Kiel Und Hamburg.
White, L. P., & Lam, L. W. (2000). A proposed infrastructural model for the establishment of organizational ethical systems. Journal of Business Ethics, 28(1), 35–42. https://doi.org/10.1023/A:1006221928960
Zarkada-Fraser, A., & Skitmore, M. (2000). Decisions with moral content: Collusion. Construction Management and Economics, 18(1), 101–111. https://doi.org/10.1080/014461900370997
Zekos, G. I. (2004). Ethics versus corruption in globalization. Journal of Management Development, 23(7), 631–647. https://doi.org/10.1108/02621710410546641
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2023 The International Journal of Accounting and Business Society
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
The copyright of the received article shall be assigned to the journal as the publisher of the journal. The intended copyright includes the right to publish the article in various forms (including reprints). The journal maintains the publishing rights to the published articles.
