Managing Conflict of Interests in Professional Accounting Firms: A Research Synthesis

Abstract

This paper synthesises the research related to managing conflict of interests in professional accounting firms. The main purpose is to provide information about the current state of knowledge on this topic and to highlight the areas requiring further research. The extant research has been reviewed by developing a framework through the integration of Risk Management Framework by ISO 31000:2009 and the International Code of Ethics for Professional Accountants. Specifically, literature has been classified across the establishment of context, assessment, treatment, control and monitoring of conflict of interests. The literature reveals that there is a lack of understanding about how the conflict of interests operates at the level of an individual accounting professional. Addressing this gap will help to develop behavioural interventions for strengthening the professionals’ independence in fact and, thereby, facilitating the management of conflict of interests. The key message this synthesised research provides for professional accounting firms and the regulators is that, for effective management of conflict of interests, behavioural interventions should be informed by the professionals’ unconscious (automatic) as well as their conscious (controlled) cognitive processes. This study is the first one to view the conflict of interests in a professional accounting environment through the lens of behavioural risk management. Moreover, the framework adopted for reviewing the extant literature provides a comprehensive view of the issues surrounding the ineffective management of the conflict of interests.

This is a preview of subscription content, access via your institution.

Fig. 1

Abbreviations

AICPA:

American Institute of Certified Public Accountants

NASBA:

National Association of State Boards of Accountancy

AAT:

Association of Accounting Technicians

ACCA:

Association of Chartered Certified Accountants

ICAEW:

Institute of Chartered Accountants in England and Wales

CIMA:

Certified Institute of Management Accountants

CIPFA:

Chartered Institute of Public Finance and Accountancy

ICAS:

Institute of Chartered Accountants of Scotland (ICAS)

CAI:

Chartered Accountants Ireland

References

  1. Adams, J., Tashchian, A, & Shore, T. (2001). Codes of ethics as signals for ethical behavior. Faculty Publications. Retrieved from http://digitalcommons.kennesaw.edu/facpubs/1770.

  2. Agnew, H. (2015). Professional services: Accounting for change. Retrieved from https://next.ft.com/content/938ed6c6-36e6-11e5-bdbb-35e55cbae175.

  3. Ahmad, M. (2015). The impact of ex-auditors’ employment with audit clients on perceptions of auditor independence in Malaysia. Procedia: Social and Behavioral Sciences, 172, 479–486.

    Google Scholar 

  4. Amali, J. W. (2010). Motivated to be unethical. International Journal of Interdisciplinary Social Sciences, 5(3), 55.

    Google Scholar 

  5. Anderson-Gough, F., Grey, C., & Robson, K. (2001). Tests of time: organizational time-reckoning and the making of accountants in two multi-national accounting firms. Accounting, Organizations and Society, 26(2), 99–122.

    Article  Google Scholar 

  6. Arel, B., Brody, R., & Pany, K. (2006). Findings on the effects of audit firm rotation on the audit process under varying strengths of corporate governance. Advances in Accounting, 22, 1–27.

    Article  Google Scholar 

  7. Ashkanasy, N. M., Windsor, C. A., & Trevino, L. K. (2006). Bad Apples in bad barrels revisited: Cognitive moral development, just world beliefs, rewards and ethical decision making. Business Ethics Quarterly, 16(1), 449–473.

    Article  Google Scholar 

  8. Ayal, S., & Gino, F. (2012). Honest rationales for dishonest behavior. In M. Mikulincer & P. R. Shaver (Eds.), The social psychology of morality: Exploring the causes of good and evil, Herzliya series on personality and social psychology (pp. 149–166). Washington, DC, US: American Psychological Association.

    Google Scholar 

  9. Ayers, S., & Kaplan, S. E. (2003). Review partners’ reactions to contact partner risk judgments of prospective clients. Auditing A Journal of Practice & Theory, 22(1), 29.

    Article  Google Scholar 

  10. Bae, G. S., Kallapur, S., & Rho, J. H. (2013). Departing and incoming auditor incentives and auditor-client misalignment under mandatory auditor rotation: Evidence from Korea. [SSRN Scholarly Paper]. Rochester, NY: Social Science Research Network. Retrieved from http://papers.ssrn.com/abstract=2281127.

  11. Bangun, Y. K., & Asri, M. (2017). Auditor Ethical Decision Making (pp. 27–45). V (VI): Scientific Research Journal.

    Google Scholar 

  12. Banker, R. D., Chang, H., & Kao, Y. (2002). Impact of information technology on public accounting firm productivity. Journal of Information Systems, 16(2), 209–222.

    Article  Google Scholar 

  13. Bargh, J. A., Chaiken, S., Raymond, P., & Hymes, C. (1996). The automatic evaluation effect: Unconditional automatic attitude activation with a pronunciation task. Journal of Experimental Social Psychology, 32(1), 104–128.

    Article  Google Scholar 

  14. Bargh, J. A., & Chartr, T. L. (1999). The unbearable automaticity of being. American Psychologist, 54, 462–479.

    Article  Google Scholar 

  15. Bazerman, M. H., & Gino, F. (2012). Behavioral ethics: Toward a deeper understanding of moral judgement and dishonesty. Annual Review of Law and Social Science, 8, 85–104.

    Article  Google Scholar 

  16. Bazerman, M. H., Loewenstein, G., & Moore, D. A. (2002). Why good accountants do bad audits. Harvard Business Review, 11(1), 72–98.

    Google Scholar 

  17. Beasley, M., Carcello, J., & Hermanson, D. (2000a). Preventing fraudulent financial reporting. CPA Journal, 70(12), 14–21.

    Google Scholar 

  18. Beasley, M. S., Carcello, J. V., Hermanson, D. R., & Lapides, P. D. (2000b). Fraudulent financial reporting: Consideration of industry traits and corporate governance mechanisms. Accounting Horizons, 14(4), 441–454.

    Article  Google Scholar 

  19. Beattie, V., & Fearnley, S. (2002). Auditor independence and non-audit services: A literature review. London, UK: Institute of Chartered Accountants in England & Wales. Retrieved from http://eprints.gla.ac.uk/33531/.

  20. Beattie, V., Fearnley, S., & Brandt, R. (2005). Auditor independence and audit risk: A reconceptualisation. Journal of International Accounting Research, 4(1), 39–71.

    Article  Google Scholar 

  21. Bedard, J. C., Deis, D. R., Curtis, M. B., & Jenkins, J. G. (2008). Risk monitoring and control in audit firms: A research synthesis. Auditing: A Journal of Practice & Theory, 27(1), 187–218.

    Article  Google Scholar 

  22. Bedard, J., Ettredge, M., Jackson, C., & Johnstone, K. (2006). Knowledge, Experience and Work-Around Behaviors: Electronic Media in the Professional Audit Environment. [SSRN Scholarly Paper]. Rochester, NY: Social Science Research Network. Retrieved from https://papers.ssrn.com/abstract=934200.

  23. Bedard, J. C., Jackson, C., Ettredge, M. L., & Johnstone, K. (2003). The effect of training on auditors’ acceptance of an electronic work system. International Journal of Accounting Information Systems, 4, 227–250.

    Article  Google Scholar 

  24. Bobek, D. D., Hageman, A. M., & Radtke, R. R. (2015). The effects of professional role, decision context, and gender on the ethical decision making of public accounting professionals. Behavioral Research in Accounting., 27(1), 55–78.

    Article  Google Scholar 

  25. Bobek, D. D., & Radtke, R. R. (2007). An experiential investigation of tax professionals’ ethical environments. The Journal of the American Taxation Association, 29(2), 63–84.

    Article  Google Scholar 

  26. Booth, P., & Schulz, A. K.-D. (2004). The impact of an ethical environment on managers’ project evaluation judgements under agency problem conditions. Accounting, Organizations and Society, 29(5–6), 473–488.

    Article  Google Scholar 

  27. Boyd, C. (2004). The structural origins of conflicts of interest in the accounting profession. Business Ethics Quarterly, 14(3), 377–398.

    Article  Google Scholar 

  28. Cain, D. M., Loewenstein, G., & Moore, D. A. (2005). Coming clean but playing dirtier: The shortcomings of disclosure as a solution to conflicts of interest. In D. A. Moore, D. M. Cain, G. Lowenstein, & M. H. Bazerman (Eds.), Conflicts of interest: Challenges and solutions in business, law, medicine and public policy (p. 104). Cambridge: Cambridge University Press.

    Chapter  Google Scholar 

  29. Caldarelli, A., Fiondella, C., Maffei, M., Spanò, R., & Zagaria, C. (2012). Ethics in risk management practices: Insights from the Italian Mutual Credit Co-operative Banks. Retrieved from http://library2.smu.ca:80/xmlui/handle/01/24727.

  30. Casebeer, W. D., & Churchland, P. S. (2003). The neural mechanisms of moral cognition: A multiple-aspect approach to moral judgement and decision-making. Biology and Philosophy, 18(1), 169–194.

    Article  Google Scholar 

  31. Chiu, R. K. (2003). Ethical judgement and whistleblowing intention: Examining the moderating role of locus of control. Journal of Business Ethics, 43(1–2), 65–74.

    Article  Google Scholar 

  32. Chugh, D., Banaji, M. R., & Bazerman, M. H. (2005). Conflicts of interest: Problems and solutions from law, medicine and organizational settings. London: Cambridge University Press.

    Google Scholar 

  33. Citron, D. B. (2003). The UK’s framework approach to auditor independence and the commercialization of the accounting profession. Accounting, Auditing & Accountability Journal, 16(2), 244–274.

    Article  Google Scholar 

  34. Clements, C. E., Neill, J. D., & Stovall, O. S. (2012). Inherent conflicts of interest in the accounting profession. Journal of Applied Business Research, 28(2), 269–276.

    Article  Google Scholar 

  35. Cotterill, R. (2000). Enchanted looms: Conscious networks in brains and computers. Cambridge, New York: Cambridge University Press.

    Google Scholar 

  36. Cowton, C. J. (2009). Accounting and the ethics challenge: Remembering the professional body. Accounting and Business Research, 39(3), 177–189.

    Article  Google Scholar 

  37. Craswell, A., Stokes, D. J., & Laughton, J. (2002). Auditor independence and fee dependence. Journal of Accounting and Economics, 33(2), 253–275.

    Article  Google Scholar 

  38. Crump, R. (2015). FRC hits KPMG with £390,000 in fines over ethical breaches. Accountancy Age. Retrieved from https://www.accountancyage.com/aa/news/2393618/frc-hits-kpmg-with-gbp390-000-in-fines-over-ethical-breaches.

  39. Culham, T. (2013). Ethics education of business leaders: Emotional intelligence, virtues and contemplative learning. In J. Lin & R. Oxford (Eds.), Book Series: Transforming Education for the Future. Charlotte: Information Age Publishing.

    Google Scholar 

  40. Culham, T. (2015). Virtue ethics as a framework for teaching and evaluating business ethics. Journal of Business Ethics Education, 12, 77–100.

    Article  Google Scholar 

  41. Curtis, M. B. (2006). Whistleblower mechanisms: A study of the perceptions of users and responders. Florida: The Institute of Internal Auditors.

    Google Scholar 

  42. Damasio, A. R. (1994). Descartes’ error: Emotion, rationality and the human brain (p. 352). New York: Putnam.

    Google Scholar 

  43. Damasio, A. R. (2003). Looking for Spinoza: Joy, sorrow, and the feeling brain (1st ed.). Orlando Toronto London: Harvest.

    Google Scholar 

  44. Damasio, A. R. (2006). Descartes’ error: emotion, reason and the human brain. London: Vintage.

    Google Scholar 

  45. Daugherty, B. E., Dickins, D., Hatfield, R. C., & Higgs, J. L. (2012). An examination of partner perceptions of partner rotation: Direct and indirect consequences to audit quality. Auditing: A Journal of Practice & Theory, 31(1), 97–114.

    Article  Google Scholar 

  46. Davis, S., DeZoort, F. T., & Kopp, L. S. (2006). The effect of obedience pressure and perceived responsibility on management accountants’ creation of budgetary slack. Behavioral Research in Accounting, 18(1), 19–35.

    Article  Google Scholar 

  47. Defond, M. L., & Francis, J. R. (2005). Audit Research after Sarbanes-Oxley. Auditing A Journal of Practice & Theory, 24, 5–30.

    Article  Google Scholar 

  48. Deis, D. R. J., & Giroux, G. A. (1992). Determinants of audit quality in the public sector. The Accounting Review, 67(3), 462–479.

    Google Scholar 

  49. Deis, D., & Rose, A. M. (2011). A comparative analysis of audit service supply using desk and working paper reviews. Journal of Business Economics Research. https://doi.org/10.19030/jber.v2i1.2849.

    Article  Google Scholar 

  50. Dopuch, N., King, R. R., & Schwartz, R. (2001). An experimental investigation of retention and rotation requirements. Journal of Accounting Research, 39(1), 93–117.

    Article  Google Scholar 

  51. Dopuch, N., King, R. R., & Schwartz, R. (2003). Independence in appearance and in fact: An experimental investigation. Contemporary Accounting Research, 20(1), 79–119.

    Article  Google Scholar 

  52. Douglas, P., Davidson, R., & Schwartz, B. (2001). The effect of organizational culture and ethical orientation on accountants’ ethical judgments. Journal of Business Ethics, 34(2), 101–121.

    Article  Google Scholar 

  53. Dowling, C. (2009). Appropriate audit support system use: The influence of auditor, audit team and firm factors. [SSRN Scholarly Paper]. Rochester, NY: Social Science Research Network. Retrieved from http://papers.ssrn.com/abstract=1317140.

  54. Duska, R., Duska, B. S., & Ragatz, J. (2011). Accounting codes of conduct (pp. 77–92). New York: Wiley-Blackwell. https://doi.org/10.1002/9781444395907.ch5/summary.

    Book  Google Scholar 

  55. Endenich, C., & Trapp, R. (2018). Ethical implications of management accounting and control: A systematic review of the contributions from the journal of business ethics. Journal of Business Ethics. https://doi.org/10.1007/s10551-018-4034-8.

    Article  Google Scholar 

  56. Espinosa-Pike, M., & Barrainkua, I. (2016). An exploratory study of the pressures and ethical dilemmas in the audit conflict. Revista de Contabilidad, 19(1), 10–20.

    Article  Google Scholar 

  57. Fatemi, D., Hasseldine, J., & Hite, P. (2018). The Influence of ethical codes of conduct on professionalism in tax practice. Journal of Business Ethics. https://doi.org/10.1007/s10551-018-4081-1.

    Article  Google Scholar 

  58. Favere-Marchesi, M., & Emby, C. E. N. (2005). The impact of continuity on concurring partner reviews: An exploratory study. Accounting Horizons, 19(1), 1–10.

    Article  Google Scholar 

  59. Fearnley, S., Brandt, R., & Beattie, V. (2002a). Financial regulation of public limited companies in the UK: A way forward post-Enron. Journal of Financial Regulation and Compliance, 10(3), 254–265.

    Article  Google Scholar 

  60. Fearnley, S., Hines, T., Mcbride, K., & Brandt, R. (2002b). The impact of the financial reporting review panel on aspects of the independence of auditors and their attitudes to compliance in the UK. The British Accounting Review, 34(2), 109–139.

    Article  Google Scholar 

  61. Financial Reporting Council. (2016). Audit quality inspections annual report. [Inspections]. Financial Reporting Council. Retrived from https://www.frc.org.uk/Our-Work/Conduct/Audit-Quality-Review/Audit-Quality-Review-annual-reports.aspx.

  62. Flanagan, J., & Clarke, K. (2007). Beyond a code of professional ethics: A holistic model of ethical decision-making for accountants. Abacus, 43, 488–518.

    Article  Google Scholar 

  63. Florio, C. V. (2012). Conflicts of interest and risk governance. US Securities and Exchange Commission. Retrieved from https://www.sec.gov/News/Speech/Detail/Speech/1365171491600.

  64. Frankel, R. M., Johnson, M. F., &Nelson, K. K. (2002). The relation between auditors’ fees for non-audit services and earnings management. [SSRN Scholarly Paper]. Rochester, NY: Social Science Research Network. Retrieved from http://papers.ssrn.com/abstract=296557.

  65. Geiger, M. A., North, D. S., & O’Connell, B. T. (2005). The auditor-to-client revolving door and earnings management. Journal of Accounting, Auditing & Finance, 20(1), 1–26.

    Article  Google Scholar 

  66. Geiger, M. A., & Raghunandan, K. (2002). Auditor tenure and audit reporting failures. [SSRN Scholarly Paper]. Rochester, NY: Social Science Research Network. Retrieved from http://papers.ssrn.com/abstract=276695.

  67. Gonzalez, C., Dana, J., Koshino, H., & Just, M. (2005). The framing effect and risky decisions: Examining cognitive functions with fMRI. Journal of Economic Psychology, 26(1), 1–20.

    Article  Google Scholar 

  68. Goto, S. (2004). A behavioral risk management system. Retrieved from http://academiccommons.columbia.edu/catalog/ac:119284.

  69. Green, D. P., Ha, S. E., & Bullock, J. G. (2010). Enough already about ‘black box’ experiments: Studying mediation is more difficult than most scholars suppose. Annals of the American Academy of Political and Social Science, 628, 200–208.

    Article  Google Scholar 

  70. Green, J., & Zimiles, E. (2013). Conflicts of interest. Investigations Quarterly, 1(14), 8–12.

    Google Scholar 

  71. Greene, J. D., Sommerville, R. B., Nystrom, L. E., Darley, J. M., & Cohen, J. D. (2001). An fMRI investigation of emotional engagement in moral judgement. Science, 293(5537), 2105–2108.

    Article  Google Scholar 

  72. Guiral, A., Rodgers, W., Ruiz, E., & Gonzalo, J. A. (2010). Ethical dilemmas in auditing: Dishonesty or unintentional bias? Journal of Business Ethics, 91(1), 151–166.

    Article  Google Scholar 

  73. Haidt, J. (2001). The emotional dog and its rational tail: A social intuitionist approach to moral judgment. Psychological Review, 108(4), 814–834.

    Article  Google Scholar 

  74. Hatfield, R. C., Jackson, S. B., & Vandervelde, S. D. (2011). The effects of prior auditor involvement and client pressure on proposed audit adjustments. Behavioral Research in Accounting, 23(2), 117–130.

    Article  Google Scholar 

  75. Healy, P. M., & Palepu, K. G. (2001). Information asymmetry, corporate disclosure and the capital markets: A review of the empirical disclosure literature. Journal of Accounting and Economics, 31(1–3), 405–440.

    Article  Google Scholar 

  76. Hermann, H., Trachsel, M., & Biller-Andorno, N. (2017). Accounting for intuition in decision-making capacity: Rethinking the reasoning standard? Philosophy, Psychiatry, & Psychology, 24, 313–324.

    Article  Google Scholar 

  77. IESBA. (2015). 2015 Handbook of the code of ethics for professional accountants. International Federation of Accountants. Retrieved from http://www.ethicsboard.org/.

  78. IESBA. (2018). 2018 Handbook of the international code of ethics for professional accountants. Retrieved from https://www.ethicsboard.org/iesba-code.

  79. Ishaque, M. (2019). Cognitive approach to understand the impact of conflict of interests on accounting professionals’ decision-making behaviour. Accounting Forum. https://doi.org/10.1080/01559982.2019.1583303.

    Article  Google Scholar 

  80. ISO (2009). ISO 31000:2009-Risk management principles and guidelines. ISO 31000:2009. Retrieved from http://www.iso.org/iso/catalogue_detail?csnumber=43170.

  81. Iyer, V. M., & Rama, D. V. (2004). Clients’ expectations on audit judgements: A note. Behavioral Research in Accounting, 16(1), 63–74.

    Article  Google Scholar 

  82. Jepma, M., & López-Solà, M. (2014). Anxiety and framing effects on decision making: insights from neuroimaging. The Journal of Neuroscience: The Official Journal of the Society for Neuroscience, 34(10), 3455–3456.

    Article  Google Scholar 

  83. Johnson, R. N., & Hansen, G. R. (2011). Audit fees and engagement profitability. The CPA Journal, 81, 64.

    Google Scholar 

  84. Johnson, E., Khurana, I. K., & Reynolds, J. K. (2002). Audit-firm tenure and the quality of financial reports. Contemporary Accounting Research, 19(4), 637–660.

    Article  Google Scholar 

  85. Jones, J., Massey, D. W., & Thorne, L. (2003). Auditor’s ethical reasoning: Insights from past research and implications for the future. Journal of Accounting Literature, 22, 45–103.

    Google Scholar 

  86. Juhari, R. J., Mohd-Sanusi, Z., Rahman, R. A., & Omar, N. B. (2013). Auditors’ independence, experience and ethical judgements: The case of Malaysia. Journal of Business and Policy Research, 8(1), 100–119.

    Google Scholar 

  87. Kadous, K., Kennedy, S. J., & Peecher, M. E. (2003). The effect of quality assessment and directional goal commitment on auditor’s acceptance of client-preferred accounting methods. The Accounting Review, 78(3), 759–778.

    Article  Google Scholar 

  88. Kaplan, S. E., & Whitecotton, S. M. (2001). An examination of auditors’ reporting intentions when another auditor is offered client employment. Auditing: A Journal of Practice & Theory, 20(1), 45–63.

    Article  Google Scholar 

  89. Kinney, W. R., Palmrose, Z.-V., & Scholz, S. (2004). Auditor independence, non-audit services and restatements: Was the U.S. Government Right? Journal of Accounting Research, 42(3), 561–588.

    Article  Google Scholar 

  90. Koh, H. C., & Mahathevan, P. (1993). The effects of client employment on auditor independence. The British Accounting Review, 25(3), 227–242.

    Article  Google Scholar 

  91. Kung, F.-H., & Huang, C. L. (2013). Auditors’ moral philosophies and ethical beliefs. Management Decision. https://doi.org/10.1108/00251741311309616/full/html.

    Article  Google Scholar 

  92. Lakoff, G., & Johnson, M. (1999). Philosophy in the flesh: The embodied mind & its challenge to western thought. New York: Basic Books.

    Google Scholar 

  93. Latan, H., Chiappetta Jabbour, C. J., de Sousa, Lopes, & Jabbour, A. B. (2019). Ethical awareness, ethical judgment and whistleblowing: A moderated mediation analysis. Journal of Business Ethics, 155(1), 289–304.

    Article  Google Scholar 

  94. LeDoux, J. E. (1999). The emotional brain: The mysterious underpinnings of emotional life. London: Routledge.

    Google Scholar 

  95. Lennox, C. (2003). Opinion shopping and the role of audit committees when audit firms are dismissed: The US experience. Edinburgh: Institute of Chartered Accountants of Scotland.

    Google Scholar 

  96. Lo, B., & Field, M. J. (eds). (2009). Conflict of interest in medical research, education and practice. The National Academies Collection: Reports funded by National Institutes of Health. Washington (DC): National Academies Press (US). Retrieved from http://www.ncbi.nlm.nih.gov/books/NBK22942/.

  97. Mayhew, B.W., & Pike, J. (2004). Does investor selection of auditors enhance auditor independence? [SSRN Scholarly Paper]. Rochester, NY: Social Science Research Network. Available at: http://papers.ssrn.com/abstract=557181.

  98. McMillan, K. P. (2004). Trust and the virtues: A solution to the accounting scandals? Critical Perspectives on Accounting, 15(6–7), 943–953.

    Article  Google Scholar 

  99. Menon, K., & Williams, D. D. (2004). Former audit partners and abnormal accruals. The Accounting Review, 79(4), 1095–1118.

    Article  Google Scholar 

  100. Moll, J., de Oliveira-Souza, R., Moll, F. T., Ignácio, F. A., Bramati, I. E., Caparelli-Dáquer, E. M., et al. (2005). The moral affiliations of disgust: a functional MRI study. Cognitive and behavioral neurology: Official Journal of the Society for Behavioral and Cognitive Neurology, 18(1), 68–78.

    Article  Google Scholar 

  101. Moore, D. A., Cain, D. M., Loewenstein, G., & Bazerman, M. H. (2005). Conflicts of interest: Challenges and solutions in business, law, medicine and public policy. Cambridge: Cambridge University Press.

    Book  Google Scholar 

  102. Moore, D. A., & Loewenstein, G. (2004). Self-interest, automaticity and the psychology of conflict of interest. Social Justice Research, 17(2), 189–202.

    Article  Google Scholar 

  103. Moore, D. A., Loewenstein, G., Tanlu, L. & Bazerman, M. H. (2003). Auditor independence, conflict of interest and the unconscious intrusion of bias. Working paper/Division of Research, Harvard Business School; 03-116. Boston, MA.

  104. Moore, D. A., Tanlu, L., & Bazerman, M. (2010). Conflict of interest and the intrusion of bias. Retrieved from http://www.hbs.edu/faculty/Pages/item.aspx?num=37624.

  105. Moore, D. A., Tetlock, P. E., Tanlu, L., & Bazerman, M. H. (2006). Conflicts of interest and the case of auditor independence: Moral seduction and strategic issue cycling. Academy of Management Review, 31(1), 10–29.

    Article  Google Scholar 

  106. Near, J. P., Rehg, M., Scotter, V., Jr., & Miceli, M. P. (2004). Developing a model of the whistle-blowing process: How does type of wrongdoing affect the process. Business Ethics Quarterly, 14, 219–242.

    Article  Google Scholar 

  107. Nelson, M. W. (2004). A review of experimental and archival conflicts-of-interest research in auditing. [SSRN Scholarly Paper]. Rochester, NY: Social Science Research Network. Retrieved from http://papers.ssrn.com/abstract=511383.

  108. O’Connor, S. M. (2006). Strengthening auditor independence by reducing the need for it: Reestablishing audits as control and premium signaling mechanisms. [SSRN Scholarly Paper]. Rochester, NY: Social Science Research Network. Retrieved from http://papers.ssrn.com/abstract=911881.

  109. Otley, D. T., & Pierce, B. J. (1996). Auditor time budget pressure: Consequences and antecedents. Accounting, Auditing & Accountability Journal, 9(1), 31–58.

    Article  Google Scholar 

  110. Panksepp, J. (1998). Affective neuroscience: The foundations of human and animal emotions. New York: Oxford University Press.

    Google Scholar 

  111. Panksepp, J. (2009). Brain emotional systems and qualities of mental life: From animal models of affect to implications for psychotherapeutics. The healing power of emotion: Affective neuroscience, development & clinical practice (pp. 1–26). New York: W. W. Norton & Company.

    Google Scholar 

  112. Pierce, A. (2007). Ethics and the professional accounting firm: A literature review. Edinburgh: The Institute of Chartered Accountants of Scotland.

    Google Scholar 

  113. Pierce, B., & Sweeney, B. (2004). Cost–quality conflict in audit firms: An empirical investigation. European Accounting Review, 13(3), 415–441.

    Article  Google Scholar 

  114. Preston, A. M., Cooper, D. J., Scarbrough, D. P., & Chilton, R. C. (1995). Changes in the code of ethics of the U.S. accounting profession, 1917 and 1988: The continual quest for legitimation. Accounting, Organizations and Society, 20(6), 507–546.

    Article  Google Scholar 

  115. Reinstein, A., & McMillan, J. J. (2004). The Enron debacle: More than a perfect storm. Critical Perspectives on Accounting, 15(6–7), 955–970.

    Article  Google Scholar 

  116. Rodgers, W. (2006). Process thinking: Six pathways to successful decision making. Bloomington: iUniverse.

    Google Scholar 

  117. Rodgers, W. (2009). Ethical beginnings: Preferences, rules and principles influencing decision making. Bloomington: Universe.

    Google Scholar 

  118. Rodgers, W., & Gago, S. (2001). Cultural and ethical effects on managerial decisions: Examined in a throughput model. Journal of Business Ethics, 31(4), 355–367.

    Article  Google Scholar 

  119. Rodgers, W., & Gago, S. (2006). Biblical scriptures underlying six ethical models influencing organizational practices. Journal of Business Ethics, 64(2), 125–136.

    Article  Google Scholar 

  120. Ronen, J. (2010). Corporate audits and how to fix them. Journal of Economic Perspectives, 24(2), 189–210.

    Article  Google Scholar 

  121. Ruddock, C. M. S., Taylor, S. J., & Taylor, S. L. (2004). Non-audit services and earnings conservatism: Is auditor independence impaired? [SSRN Scholarly Paper]. Rochester, NY: Social Science Research Network. Retrieved from http://papers.ssrn.com/abstract=303343.

  122. Sánchez-Medina, A. J., Blázquez-Santana, F., & Alonso, J. B. (2019). Do auditors reflect the true image of the company contrary to the clients’ interests? An artificial intelligence approach. Journal of Business Ethics, 155(2), 529–545.

    Article  Google Scholar 

  123. Schminke, M., Arnaud, A., & Kuenzi, M. (2007). The power of ethical work climates. Organizational Dynamics, 36(2), 171–186.

    Article  Google Scholar 

  124. Schneider, W., & Shiffrin, R. M. (1977). Controlled and automatic human information processing: I. Detection, search and attention. Psychological Review, 84(1), 1–66.

    Article  Google Scholar 

  125. Shafer, W. E., Morris, R. E., & Ketchand, A. A. (2001). Effects of personal values on auditors’ ethical decisions. Accounting, Auditing & Accountability Journal, 14(3), 254–277.

    Article  Google Scholar 

  126. Sharma, D. S., & Sidhu, J. (2001). Professionalism vs commercialism: The association between non-audit services (NAS) and audit independence. Journal of Business Finance & Accounting, 28(5–6), 563–594.

    Article  Google Scholar 

  127. Sikka, P. (2004). Some questions about the governance of auditing firms. International Journal of Disclosure and Governance, 1(2), 186–200.

    Article  Google Scholar 

  128. Skaife, H. A., LaFond, R., & Mayhew, B. W. (2003). Do non-audit services compromise auditor independence? Further evidence. [SSRN Scholarly Paper]. Rochester, NY: Social Science Research Network. Retrieved from http://papers.ssrn.com/abstract=305720.

  129. Stead, W. E., Worrell, D. L., Spalding, J. B., & Stead, J. G. (1987). Unethical decision: Socially learned behaviours. Journal of Social Behaviour and Personality, 2(1), 105–115.

    Google Scholar 

  130. Stumpf, S. A., Doh, J. P., & Clark, K. D. (2002). Professional services firms in transition: Challenges and opportunities for improving performance. Organizational Dynamics, 31(3), 259–279.

    Article  Google Scholar 

  131. Tavakoli, A. A., Keenan, J. P., & Cranjak-Karanovic, B. (2003). Culture and whistleblowing: An empirical study of croatian and united states managers utilizing Hofstede’s cultural dimensions. Journal of Business Ethics, 43(1–2), 49–64.

    Article  Google Scholar 

  132. Tenbrunsel, A. E. (2005). Commentary: Bounded ethicality and conflicts of interest. In A. E. Tenbrunsel (Ed.), Conflicts of interest: Challenges and solutions in business, law, medicine and public policy. Cambridge: Cambridge University Press.

    Google Scholar 

  133. Thagard, P. (2007). The moral psychology of conflicts of interest: Insights from affective neuroscience. Journal of Applied Philosophy, 24(4), 367–8211.

    Article  Google Scholar 

  134. Treviño, L. K., Brown, M., & Hartman, L. P. (2003). A qualitative investigation of perceived executive ethical leadership: Perceptions from inside and outside the executive suite. Human Relations, 56(1), 5–37.

    Article  Google Scholar 

  135. Trotman, K. T., Wright, A. M., & Wright, S. (2005). Auditor negotiations: An examination of the efficacy of intervention methods. The Accounting Review, 80(1), 349–367.

    Article  Google Scholar 

  136. Tucker, R., & Matsumura, E. M. (2002). Second Partner review: An experimental investigation. [SSRN Scholarly Paper]. Rochester, NY: Social Science Research Network. Retrieved from https://papers.ssrn.com/abstract=313919.

  137. Wagar, B. M., & Thagard, P. (2004). Spiking Phineas Gage: A neurocomputational theory of cognitive-affective integration in decision making. Psychological Review, 111(1), 67–79.

    Article  Google Scholar 

  138. Weaver, G. R., Reynolds, S. J., & Brown, M. E. (2014). Moral intuition: Connecting current knowledge to future organizational research and practice. Journal of Management, 40(1), 100–129.

    Article  Google Scholar 

  139. Weaver, G. R., & Treviño, L. K. (2001). The role of human resources in ethics/compliance management: A fairness perspective. Human Resource Management Review, 11(1–2), 113–134.

    Article  Google Scholar 

  140. Williford, K., & Small, D. (2013). Establishing an effective compliance program: An overview to protecting your organization. Association of Corporate Counsel. Retrieved from http://www.acc.com/legalresources/quickcounsel/eaecp.cfm.

  141. Withers, I. (2018). Grant Thornton Fined £3m over conflicts of interest on audits. The Telegraph. Retrieved from https://www.telegraph.co.uk/business/2018/08/29/grant-thornton-fined-3m-conflicts-interest-audits/.

  142. Woiceshyn, J. (2011). A model for ethical decision making in business: Reasoning, intuition, and rational moral principles. Journal of Business Ethics, 104, 1–13.

    Article  Google Scholar 

  143. Wolford, G., Miller, M. B., & Gazzaniga, M. (2000). The left hemisphere’s role in hypothesis formation. The Journal of Neuroscience, 20(6), RC64.

    Article  Google Scholar 

  144. Worrell, D. L., Stead, W. E., Stead, J. G., & Spalding, J. B. (1985). Unethical decisions: The impact of reinforcement contingencies and managerial philosophies. Psychological Reports, 57(2), 355–365.

    Article  Google Scholar 

  145. Wyatt, A. R. (2004). Accounting professionalism—they just don’t get it! Accounting Horizons, 18(1), 45–53.

    Article  Google Scholar 

  146. Young, J. J. (2005). Changing our questions: Reflections on the corporate scandals. Accounting and the Public Interest, 5(1), 1–13.

    Article  Google Scholar 

  147. Zajonc, R. B. (1980). Feeling and thinking: Preferences need no inferences. American Psychologist, 35(2), 151–175.

    Article  Google Scholar 

  148. Zajonc, R. B. (1984). On the primacy of affect. American Psychologist, 39(2), 117–123.

    Article  Google Scholar 

  149. Zajonc, R. B., & McIntosh, D. N. (1992). Emotions research: Some promising questions and some questionable promises. Psychological Science, 3(1), 70–74.

    Article  Google Scholar 

  150. Zollo, L., Pellegrini, M. M., & Ciappei, C. (2017). What sparks ethical decision making? The interplay between moral intuition and moral reasoning: Lessons from the scholastic doctrine. Journal of Business Ethics, 145(4), 681–700.

    Article  Google Scholar 

Download references

Acknowledgements

My appreciation goes to Prof. Magdy Abdel-Kader and Dr Mirna Jabbour for their useful comments on the work this paper derives from.

Funding

This paper is part of the empirical study conducted for my PhD. I received a PhD studentship from the Anglia Ruskin University (United Kingdom).

Author information

Affiliations

Authors

Corresponding author

Correspondence to Maria Ishaque.

Ethics declarations

Conflict of interests

I declare that I have no conflict of interest.

Research Involving Human Participants and/or Animals

This study does not involve human participants.

Informed Consent

This study does not involve human participants.

Additional information

Publisher's Note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Rights and permissions

Reprints and Permissions

About this article

Verify currency and authenticity via CrossMark

Cite this article

Ishaque, M. Managing Conflict of Interests in Professional Accounting Firms: A Research Synthesis. J Bus Ethics 169, 537–555 (2021). https://doi.org/10.1007/s10551-019-04284-8

Download citation

Keywords

  • Conflict of interests
  • Professional accounting
  • Ethical decision-making
  • Independence in fact
  • Behavioural interventions
  • Behavioural risk management