The Willingness of Auditee Personnel to Convey Negative Information to Internal Versus External Auditors

53 Pages Posted: 23 Aug 2006

See all articles by Brad Tuttle

Brad Tuttle

University of South Carolina - Department of Accounting

Mark H. Taylor

University of South Florida, Muma College of Business, Lynn Pippenger School of Accountancy

Date Written: August 2006

Abstract

This study examines the willingness of information systems (IS) professionals to report critical negative information to an auditor about a major systems implementation. Borrowing from the whistle-blowing literature, we develop a model to test the influence of key variables on the choice of reporting channel. A decision case was administered to experienced IS developers. Consistent with the model, expectations as to whether management will correct the problems has a significant effect on the choice of to whom to report. The respondents are more likely to use direct organizational channels (i.e., go over the head of their immediate supervisor) than to convey the project's problems to an auditor when the expectancy that management will correct the problems is high. Conversely, respondents are more likely to convey the project's problems to an auditor when the expectancy that management will correct the problems is low. Neither promise of confidentiality nor perceptions of negative consequences have a direct effect on whistle-blowing but rather combine so that confidentiality is important only when the IS professionals perceive negative consequences to be likely. Finally, the respondents are more willing to report problems to an internal auditor than to an external auditor.

Keywords: Mum Effect, Whistleblowing, Internal Auditing, Project Escalation

JEL Classification: M41, M49, G34

Suggested Citation

Tuttle, Brad and Taylor, Mark H., The Willingness of Auditee Personnel to Convey Negative Information to Internal Versus External Auditors (August 2006). Available at SSRN: https://ssrn.com/abstract=925927 or http://dx.doi.org/10.2139/ssrn.925927

Brad Tuttle

University of South Carolina - Department of Accounting ( email )

The Francis M. Hipp Building
1705 College Street
Columbia, SC 29208
United States
803-777-6639 (Phone)
803-777-6876 (Fax)

Mark H. Taylor (Contact Author)

University of South Florida, Muma College of Business, Lynn Pippenger School of Accountancy ( email )

4202 E. Fowler Avenue
Tampa, FL 33620
United States
(813) 974-6516 (Phone)

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