Audit Independence of Tax Auditors in Thailand: Roles of Ethical Orientation, Professional Responsibility, Stakeholder Pressure, and Audit Experience

Ussahawanitchakit, Phapruke, Journal of Academy of Business and Economics

1. INTRODUCTION

Recently, auditors have become important professions for directly and indirectly promoting the growth of economics in the countries. They distinctively play significant roles in helping stakeholders and others who explore, assess, and investigate the advantages and benefits of firms' financial information in all activities by auditing any business transaction through the implementation of accounting and auditing standards, and other related regulations, rules, and laws (Intakhan and Ussahawanitchakit, 2010). Besides, they help improve the qualities of reported earnings quality and financial statements, their roles have been investigated in several aspects, such as role stress that is linked to job satisfaction, job outcomes, and job performance (Almer and Kaplan, 2002). Thus, developing auditors' behaviors, competencies, capabilities, duties, functions, and responsibilities have become interesting issues for academicians, researchers and practitioners. Accordingly, audit independence, competency, expertise, professionalism, and others are significant because they have influenced audit quality, efficiency, effectiveness, performance, success, survival and sustainability. In this study, audit independence is proposed as the key outcome of doing audit operations, practices, activities and strategies. Mainly, it is an objective and trustworthy arbiter of the fair presentation of financial results and a critical factor of profession conduct and the cornerstone of the audit profession and an essential ingredient of users' confidence in financial statements (Falk et al., 1999). Also, the antecedents of driving and explaining audit independence are investigated focusing on the relationships with their increases and changes.

Interestingly, ethical orientation, professional responsibility and stakeholder pressure are the key factors that affect the changes of audit independence. Firstly, ethical orientation refers to the approach an individual takes to making ethical judgment through ethical perceptions and sensitivity with the ability to recognize the ethical nature of a situation in a profession (Clikeman et al., 2001). Secondly, professional responsibility refers to an individual's practicing duties and functions related to a profession' standards, requirements, regulations, and rules, including preventing fraud, the management's need of insight into and control of the firm' financial affairs, the public authorities' control needs, and control of the management's use of funds from the capital providers (Eilifsen, 1998). Thirdly, stakeholder pressure refers to stakeholders' expectations, requirements and needs that force firms or individual professionals to act, do and practice appropriate actions and behaviors following their issues in order to succeed, sustain and survive in the competitive markets and environments (Sarkis et al., 2010). They are hypothesized to play significant roles in enhancing auditors' independence in their operations, practices and activities. Accordingly, the effects of ethical orientation, professional responsibility and stakeholder pressure on audit independence are examined empirically and systematically. Likewise, for adding the benefits and advantages of the aforementioned relationships, audit experience plays a potential moderator in strengthening these relationships. It refers to an auditor' unique knowledge, competencies and capabilities that occur from job practices in auditing profession by enhancing the auditor's abilities to process information, make metal comparisons of alternative solutions, initiate subsequent actions, and provide decision making efficiency and effectiveness through a good memory of information necessary and an accurate judgment of audit tasks (Chung and Monroe, 2000). Hence, all ethical orientation, professional responsibility, stakeholder pressure, audit experience, and audit independence are addressed as the important concepts of the auditing professions in the study.

Accordingly, the objective of this study is to examine the impacts of ethical orientation, professional responsibility and stakeholder pressure on audit independence of tax auditors (TAs) in Thailand through a moderator of audit experience. The key research questions in this study are: (1) How ethical orientation has an effect on audit independence, (2) How professional responsibility has an impact on audit independence, (3) How stakeholder pressure has an influence on audit independence, (4) Whether audit experience is the moderator of the ethical orientation-audit independence relationships, (5) Whether audit experience is the moderator of the professional responsibility-audit independence relationships, (6) Whether audit experience is the moderator of the stakeholder pressure-audit independence relationships, and (7) whether the research relationships are positive.

The remaining parts of this study are organized as follows. First, relevant literature reviews of ethical orientation, professional responsibility, stakeholder pressure, audit experience, and audit independence are addressed and criticized, and significant research hypothesis development is also presented. Second, the research methods used to test the hypotheses are discussed including an explanation of why tax auditors (TAs) in Thailand chosen as the sample of the study; sample selection and data collection procedure; variables; and methods. Third, the results of the study derived from 241 tax auditors in Thailand are presented and their reasonable discussions with existing literature supports are shown. Finally, the study concludes by discussing implications for theory and profession, identifying limitations of the study, and providing suggestions and directions for future research.

2. ETHICAL ORIENTATION, PROFESSIONAL RESPONSIBILITY, STAKEHOLDER PRESSURE, AUDIT EXPERIENCE, AND AUDIT INDEPENDNENCE

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Here, the influences of ethical orientation, professional responsibility and stakeholder pressure on audit independence are potentially investigated. Audit experience also plays a significant role in moderating the ethical orientation-audit independence relationships, the professional responsibility-audit independence relationships, and the stakeholder pressure-audit independence relationships. The positive relationships of …

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Publication information: Article title: Audit Independence of Tax Auditors in Thailand: Roles of Ethical Orientation, Professional Responsibility, Stakeholder Pressure, and Audit Experience. Contributors: Ussahawanitchakit, Phapruke - Author. Journal title: Journal of Academy of Business and Economics. Volume: 12. Issue: 1 Publication date: January 2012. Page number: 1+. © 2008 International Academy of Business and Economics. COPYRIGHT 2012 Gale Group.

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