Attitudes toward dysfunctional audit behaviour: the effect of budget emphasis, leadership behaviour, and effectiveness of audit review

Dysfunctional Audit Behaviour (DAB) is an accepted problem, associated with decreased audit quality. This study develops and tests a theoretical model that identifies factors contributing to DAB. Budget emphasis, leadership behaviour structure and consideration, and effectiveness of audit review were examined as antecedents of attitudes toward DAB. A path analysis from a partial least square (PLS) approach was employed based on survey results from 225 Audit Managers in Malaysia. The findings produced consistent evidence in support of the theoretical model. It is not an emphasis on meeting budgets that leads to undesirable behaviour, but contextual variables, such as leadership behaviour structure and effectiveness of audit review. The study is confined to the auditing environment, and is subject to the normal limitations of survey based research. The results of the study should impact auditing procedures, hiring, training and promotion decisions, and help to minimise the occurrence and acceptance of DAB. The study was significant for the reason that there is an increased awareness by the Malaysian Institute of Accountants (MIA) as the policy makers and the Practice Review Committee (PRC) concerning the impairment of the audit quality and DAB resulting from the first PRC report