See Something, Say Nothing? How an Auditor's Moral Judgments Influence Detected Fraud Reporting

While regulators have found ethical judgment associated with the failure to detect fraud, very little academic research has explored the role of personal ethics in reporting actual fraud discovered during the audit process. This study examines the relationship between an auditor’s moral judgments and their decision to report detected immaterial fraud. Grounding this research in Moral Foundations Theory (MFT), I perform a between-group experiment to examine the influence of the care/harm and fairness/cheating moral foundations on an auditor’s decision to report detected immaterial fraud. I posit that auditors with high care/harm and high fairness/cheating moral foundations are more likely to report detected immaterial fraud. I used the SMOTE technique to generate synthetic observations, supplementing my participant sample. While the results of this study did not support my hypotheses, my examination illustrates auditors overwhelmingly report fraud (95%), regardless of its materiality. This empirical evidence can reassure investors that although auditors are not required to detect fraud, they will “do the right thing” and report it when detected.

Grantor dc:publisher

Creighton University

Year dc:date.issued

2023

Author dc:creator

• Ling, Melissa A.

Advisors dc:contributor.advisor

• Knight, Margaret E.
• Frazier, Michael Lance

• Auditor
• Ethical Decision-Making
• Fraud Detection
• MFQ30
• Moral Foundations Theory
• SMOTE

Statement dc:rights

• Copyright is retained by the Author. A non-exclusive distribution right is granted to Creighton University and to ProQuest following the publishing model selected above.

Language dc:language.iso

en_US

Repository record dc:identifier.uri

https://cdr.creighton.edu/handle/10504/153966

OAI identifier oai:identifier

oai:cdr.creighton.edu:10504/153966