Ethical Orientation, Situational Factors and Auditors' Ethical Decision Making in Bali: A Moderating Variable of Locus of Controls

Abstract

Aims: This study aims to examine the influence of ethical orientation and situational factors on auditors' ethical decision-making in Bali, with locus of control as a moderating variable. Study Design: A quantitative study using the Partial Least Square (PLS) technique for data analysis. Methodology: The study involved 90 registered auditors, with data collected through structured questionnaires. The research explored how ethical orientations (idealism and relativism), risk preference, current information recency, and moral intensity influence ethical decision-making. The moderating role of locus of control was also assessed. Results: The findings indicate that ethical decision-making is significantly influenced by relativism ethical orientation and moral intensity. Situational factors such as current information recency and risk preference also affect decision-making, with locus of control moderating these relationships. However, locus of control did not influence the relationship between ethical orientations and ethical decision-making. Conclusion: Ethical decision-making among auditors is shaped by both ethical orientations and situational factors, with locus of control playing a moderating role for specific variables. Recommendations: For Practitioners is the audit firms should implement training programs that address the effects of ethical orientations and situational factors on decision-making, aiming to strengthen ethical awareness and behavior. For Policy-Makers is the Regulatory bodies should establish policies to enhance the understanding and management of situational factors that affect ethical decision-making in auditing. For Future Research is the additional studies should investigate other moderating variables and extend the research to different professional contexts to generalize the findings.