The Distortions of Machiavellianism, Containment Solutions and Effect on the Quality of Audit Judgments

Document Type : Original Article

Authors

Department of Accounting, Tabriz Branch, Islamic Azad University, Tabriz, Iran

10.22067/ijaaf.2025.45229.1443

Abstract

The present research, using the qualitative method of background, has tried to identify the effective background and interfering factors in the creation of Machiavellian tendencies of auditors and to calculate the strategies and consequences of limiting the Machiavellian characteristics of auditors. The statistical population of the current research is composed of expert and experienced university professors in the field of auditing, partners of auditing institutions, managers of auditing organizations, and other members of the community of certified accountants. The period of the study implementation is between 2021 and 2022. Using the purposeful mixed sampling method, 14 in-depth and semi-structured interviews were conducted until theoretical saturation was reached. Also, the structural equation modeling approach was used to measure the model's validity, and PLS software was used to fit the model. The findings show that the effective and intervening factors in creating Machiavellian tensions include preventive and supervisory factors, cultural, environmental, and social factors, structural and technical factors, financial and economic factors, and perceptual, human, and knowledge factors. Also, providing cultural and social platforms, structural and technical reforms, economic improvement and political communication, strengthening the knowledge and skill of the workforce, and providing a legal and regulatory platform are among the strategies to contain Machiavellian distortions. In addition, cultural and social influences on the auditing profession and laying the foundation for increasing audit quality are essential consequences of enclosing Machiavellian distortions.

Keywords

Main Subjects


  1. American Institute of Certified Public Accountants (AICPA). (2020). Professional standards, report, conclusions and recommendations, New York, USA.
  2. Arens, A. A. E., Beasley, R. J., & Mark, S. (2012). Auditing and assurance service an integrated approach, 14th global edition. New Jersey: Prentice Hall.
  3. L.P. (2003). Ex-Andersen firms will pay $40 million Enron settlement, Working paper, available at: https://www.nytimes.com/2003/07/15/business/ex-andersen-firms.
  4. Brown, J. O., Hays, J. and Stuebs Jr, M. T. (2016). Modeling accountant whistleblowing intentions: Applying the theory of planned behavior and the fraud triangle. Accounting and the Public Interest, 16(1), pp. 28-56.https://doi.org/10.2308/apin-51675
  5. Cahyono, S. and Sudaryati, E. (2023). Machiavellian behavior in auditor ethics and professionalism: Cognitive moral development study approach. Global Financial Accounting Journal, 7(1), pp. 28-44. http://dx.doi.org/10.37253/gfa.v7i1.7445
  6. Castka, P., Searcy, C. and Mohr, J. (2020). Technology-enhanced auditing: Improving veracity and timeliness in social and environmental audits of supply chains. Journal of Cleaner Production, 258, A. 120773. https://doi.org/10.1016/j.jclepro.2020.120773
  7. Erickson, M., Hanlon, M. and Maydew, E. L. (2004). How much will firms pay for earnings that do not exist? Evidence of taxes paid on allegedly fraudulent earnings. The Accounting Review, 79(2), pp. 387-408.‏ https://doi.org/10.2308/accr.2004.79.2.387
  8. Graham, J. R., Harvey, C. R. and Rajgopal, S. (2005). The economic implications of corporate financial reporting. Journal of Accounting and Economics, 40(1-3), pp. 3-73.‏ https://doi.org/10.1016/j.jacceco.2005.01.002.
  9. Hamilton, E. L. and Smith, J. L. (2021). Error or fraud? The effect of omissions on management's fraud strategies and auditors' evaluations of identified misstatements. The Accounting Review, 96(1), pp. 225-249. https://doi.org/10.2308/tar-2017-0355
  10. Hammersley, J. S. and Ricci, M. A. (2021). Using audit programs to improve auditor evidence collection. The Accounting Review, 96(1), pp. 251-272.‏ https://doi.org/10.2308/tar-2018-0120
  11. Hogan, C. E., Rezaee, Z., Riley Jr, R. A. and Velury, U. K. (2008). Financial statement fraud: Insights from the academic literature. Auditing: A Journal of Practice & Theory, 27(2), pp. 231-252.‏ https://doi.org/10.2308/aud.2008.27.2.231
  12. Houghton, K. A., Jubb, C. and Kend, M. (2011). Materiality in the context of audit: the real expectations gap. Managerial Auditing Journal, 26(6), pp. 482-500.‏ https://doi.org/10.1108/02686901111142549
  13. International Auditing and Assurance Standards Board (IAASB). (2009). The auditor’s responsibilities relating to fraud in an audit of financial statements. International Standard on Auditing 240. New York: IAASB. New York.
  14. Linklater, A. (2010). Neorealism, critical theory and school of reconstruction, ministry of foreign affairs printing and publishing center, 8th edition, Tehran, Iran (In Persian).
  15. Mansouri Nalbandan, M. and Hashemi Gohar, M. (2021). Investigating the relationship between organizational culture in auditing institutions and professional judgment with emphasis on Machiavellianism. Mohsen, Investigating the Relationship between Organizational Culture in Auditing Institutions and Professional Judgment with Emphasis on.‏ https://dx.doi.org/10.2139/ssrn.3856811
  16. Mujiono, M. and Jonnardi, J. (2022). The effect of audit fee and Machiavellianism on auditor independence with professional ethics as a moderating variable. SAR (Soedirman Accounting Review): Journal of Accounting and Business, 7(1), 13-23.‏ https://doi.org/10.32424/1.sar.2022.7.1.5836
  17. Murphy, P. R. (2012). Attitude, Machiavellianism and the rationalization of misreporting. Accounting, Organizations and Society, 37(4), pp. 242-259.‏ https://doi.org/10.1016/j.aos.2012.04.002
  18. Patton, M. Q. (2014). Qualitative research & evaluation methods: Integrating theory and practice. Sage publications. 3rd ed, New York, United States.
  19. Pesudo, D. A. A., Kurniadi, C. I., Martono, S., Theotama, G. and Matitaputty, J. S. (2023). Factors affecting audit quality of BPKP–Central Java Chapter. Perspektif Akuntansi, 6(1), pp. 56-73.‏ https://doi.org/10.24246/persi.v6i1.p56-73
  20. Pranyanita, A. I. and Sujana, I. K. (2019). Pengaruh Sifat Machiavellian, time budget pressure, loc pada dysfunctional audit behavior, Akuntan Publik Di Bali. E-Jurnal Akuntansi Universitas Udayana, 26(2), pp. 1161-1188.‏
  21. Prativi (2021). The investigated the effect of Machiavellian characteristics in moderating the relationship of task complexity as antecedents of ineffective auditor behavior, International Journal of Business, Economics and Law, 24(5), pp. 288-302.
  22. Public Company Accounting Oversight Board (PCAOB). (2005). Consideration of fraud in a financial statement audit. American Institute of Certified Public Accountants, America. The U.S.
  23. Putu, I., Rasmini, N., Budiartha, I. and Widanaputra, A. A. G. P. (2020). The mediating effect of auditor dysfunctional behavior on Machiavellian character and time budget pressure of audit quality. Accounting, 6(6), pp. 1093-1102.‏ http://dx.doi.org/10.5267/j.ac.2020.7.009
  24. Sahla, W. A. and Iryanie, E. (2018). Perception of locus of control, level of education, Machiavellianism and ethical reasoning against auditor behavior in audit conflict situations. AKRUAL: Jurnal Akuntansi, 10(1), pp. 15-26.‏ https://doi.org/10.26740/jaj.v10n1.p15-26
  25. Saladrigues, R. and Grañó, M. (2014). Audit expectation gap: Fraud detection and other factors. European Accounting and Management Review, 1(1)‏, pp. 120-142. https://ssrn.com/abstract=2532494
  26. Saputri, I. G. A. Y. and Wirama, D. G. (2015). Pengaruh sifat machiavellian dan tipe kepribadian pada perilaku disfungsional auditor. E-Jurnal Ekonomi dan Bisnis Universitas Udayana, 4(2), pp. 70-86.‏ https://doi.org/10.1002/per.1912
  27. Sayal, K. and Singh, G. (2020). Investigating the role of theory of planned behavior and Machiavellianism in earnings management intentions. Accounting Research Journal, 33(6), pp. 653-668.‏ https://doi.org/10.1108/ARJ-08-2019-0153
  28. Serafeim, G. and Ioannou, I. (2013). The impact of corporate social responsibility on investment recommendations. Strategic Management, 36(7), pp. 1053-1081.
  29. Sharpe, B. M., Collison, K. L., Lynam, D. R. and Miller, J. D. (2021). Does Machiavellianism meaningfully differ from psychopathy? It depends. Behavioral Sciences & the Law, 39(5), pp. 663-677.‏ https://doi.org/10.1002/bsl.2538 .
  30. Sikka, P., Puxty, A., Willmott, H. and Cooper, C. (1998). The impossibility of eliminating the expectations gap: some theory and evidence. Critical Perspectives on Accounting, 9(3), pp. 299-330.https://doi.org/10.1006/cpac.1997.0159
  31. Teddlie, C. and Yu, F. (2007). Mixed methods sampling: A typology with examples. Journal of Mixed Methods Research, 1(1), pp. 77-100.‏ https://doi.org/10.1177/1558689806292430 .
  32. Tricky, G. Jubb, C. and Kend, M.. (2017). Investigate the relationship between Machiavellianism, moral orientation (idealism, relativism), anti-intellectualism, and social bias in Canadian accountants, European Accounting and Management Review, 18(12)‏, pp. 135-149.
  33. Wells, J. T. (2001). Why employees commit fraud. Journal of Accountancy, 191(2), p. 89.
  34. Wells, J. T. (2004). New approaches to fraud deterrence. Journal of Accountancy- New York, 197(2), pp. 72-76.‏
  35. Wijayanti, R. (2018). Studi determinan perilaku etis mahasiswa akuntansi. Jurnal Ekonomi Modernisasi, 14(3), pp. 142-156. https://doi.org/10.21067/jem.v14i3.2817
  36. Zettler, I. and Solga, M. (2013). Not enough of a ‘dark traits? Linking Machiavellianism to job performance. European Journal of Personality, 27(6), pp. 545-554. https://doi.org/10.1002/per.1912
CAPTCHA Image