Different Pathways That Suggest Whether Auditors' Going Concern Opinions Are Ethically Based

Several critics have reopened the continuing debate regarding the credibility of the auditing profession in part because of auditors' reluctance to issue warning signals to investors. At the root of auditors' lack of independence issues are conflicts of interest resulting from the structur...

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Published inJournal of business ethics Vol. 86; no. 3; pp. 347 - 361
Main Authors Rodgers, Waymond, Guiral, Andrés, Gonzalo, José A.
Format Journal Article
LanguageEnglish
Published Dordrecht Springer 01.05.2009
Springer Netherlands
Springer Nature B.V
SeriesJournal of Business Ethics
Subjects
Accounting
Appointments & personnel changes
Auditing
Auditing profession
Auditors
Auditors opinions
Audits
Bankruptcy
Business and Management
Business audits
Business Ethics
Care ethics
Conflict of interest
conflicts of interest
Corporate governance
Decision making
Deontological ethics
Education
Ethical behavior
Ethics
Financial audits
Going concerns
Management
Management audits
Moral relativism
Philosophy
Quality of Life Research
R&D
Research & development
Social responsibility
Throughput Model
Virtue ethics
warning signals
Warning systems
auditing
Throughput Model
ethics
conflicts of interest
decision making
warning signals
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Summary:Several critics have reopened the continuing debate regarding the credibility of the auditing profession in part because of auditors' reluctance to issue warning signals to investors. At the root of auditors' lack of independence issues are conflicts of interest resulting from the structural features of auditor-client relationship. The Throughput Model (TP) is advanced to illustrate how ethical issues may be influenced by conflicts of interest. In the first stage, the TP provides an isolation of auditors' ethical positions from six ethical different perspectives. In the second stage, previous TP theory is built upon by arguing a simultaneous analysis of how conflicts of interests may induce auditors' behavior. We conclude that in the current low litigation risk environment, auditors' ethical behavior (both conscious and unconscious) is clearly ' unbalanced' favoring the reluctance to issue warning signals. Finally, we offer a discussion of potential solutions to improve ethical issues.
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ISSN:0167-4544
1573-0697
DOI:10.1007/s10551-008-9851-8