Different Pathways that Suggest Whether Auditors’ Going Concern Opinions are Ethically Based

Waymond Rodgers, Andrés Guiral, José A. Gonzalo

Journal of Business Ethics · 2009 · Volume 86 · Issue 3

Abstract

Several critics have reopened the continuing debate regarding the credibility of the auditing profession in part because of auditors’ reluctance to issue warning signals to investors. At the root of auditors’ lack of independence issues are conflicts of interest resulting from the structural features of auditor–client relationship. The Throughput Model (TP) is advanced to illustrate how ethical issues may be influenced by conflicts of interest. In the first stage, the TP provides an isolation of auditors’ ethical positions from six ethical different perspectives. In the second stage, previous TP theory is built upon by arguing a simultaneous analysis of how conflicts of interests may induce auditors’ behavior. We conclude that in the current low litigation risk environment, auditors’ ethical behavior (both conscious and unconscious) is clearly ‹unbalanced’ favoring the reluctance to issue warning signals. Finally, we offer a discussion of potential solutions to improve ethical issues.

Keywords

auditing, conflicts of interest, decision making, ethics, Throughput Model, warning signals

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