MORAL INTENSITY AND DYSFUNCTIONAL AUDIT BEHAVIOR: EVIDENCE FROM INDONESIAN PUBLIC SECTOR AUDIT

Abstract

Studies regarding auditor behavior in the area of private sector audit have been well documented. However, unlike its private sector counterpart, there has been limited literatures discussing auditor behavior within the context of public sector audit. This study fills this gap in literatures. This study aims at investigating the practices of dysfunctional audit behavior among government’s auditor in Indonesia. This is a survey research. Data for this study were gathered form questioners. Respondents for this study were government’s auditors at three provinces in Indonesia. This study used three dimensions of moral intensity developed by Jones (1991) in investigating the practices of reduced audit quality behavior. The dimensions are social consensus, probability of effect and magnitude of consequences. Descriptive statistics for reduced audit quality behaviors showed that among six types of reduced audit quality behavior, relying on client explanations as substitutes for certain evidence was the most prevalent among respondents. At the other hand, failing to research a technical issue become the least common types of misbehavior committed by respondents during the course of audit. Result of regression analysis for hypothesis testing showed that perceived probability of effect toward financial statement users is negatively associated with reduced audit quality behaviors.