External Auditors Commitment to Code of Conduct in Saudi Arabia - Thesis Example

The topic of study is “A study on external auditor’s commitment to code of conduct in Saudi Arabia and the ways which enable them to follow professional behavior.”

There were many instances where the reputation of the Saudi Government was put at stake due to matters related to nonadherence to the code of conduct. This necessitates a study about the present situation and the need for external auditors to be committed to the code of conduct in the future.
Scope of the study: The study will cover a wide area of auditors’ ethics. This research will involve a detailed study of the accounting and external auditing standards of Saudi Arabia. The code of conduct of the country’s accounting standards will also be studied. Study about the external auditor’s commitment to such a code of ethics is the major area of study. Finally, this research will suggest a set of important recommendations that might help to improve the professional behaviour of external auditors in Saudi Arabia and encourage them to commit a code of conduct.
Objectives of the study
The objectives of this research work are as follows:
1. To make an analysis of the commitment of external auditors to the code of conduct in Saudi Arabia
2. To understand the ways that encourage the external auditors to follow professional behavior
3. To provide suggestions for methods to improve the commitment of external auditors

Literature review
World over very few studies was conducted in the field of personal values and accounting ethics. One among such few studies is ‘Effects of personal values on auditors’ ethical decisions.’ The study was mainly conducted among practicing auditors. The study however revealed that personal values and preferences do not influence ethical decisions in accounting. It explains that other than personal values it is contextual factors that promote unethical behavior in accounting. Another study on ethics and auditing is, ‘Testing the bases of ethical decision-making: a study of the New Zealand auditing profession.’ The study showed that most of the auditors did not avoid a difficult situation. The study also showed that demographic factors like age, gender, job profile, etc. did not influence a person’s ethical behavior in their profession. There was another study that was done to find the relationship between cultural influences on professional judgment and auditor client-conflict resolution. The study was focused on auditing professionals of Australia, China, Malaysia and India. There was a clear difference witnessed in the behavior of Australian auditors compared to that of their Asian counterparts. This is a slightly different view than the study, ‘Effects of personal values on auditors’ ethical decisions.’
“New corporate governance rules and an institutional code of conduct for listed companies are being introduced by the Securities and Commodities Authority (SCA).” (Emirates Business, 2009) The new rule was passed in late 2009. The main objective of the new rules is to ensure the highest transparency, responsibility and fairness in the statements. As per the new rules, the role of external auditors becomes very critical. An article by Roszaini Haniffa and Mohammad Hudaib shows the existence of performance gaps with respect to the roles of external auditors. This research work will be an extension of the above-mentioned studies as the main purpose is to analyze the matters that influence the professional behavior of auditing professionals.
Research method
To achieve the objective, the study will review some previous related studies and will conduct filed study through designing a questionnaire which will aim to investigate how far the external auditors are committed to code of conduct in Saudi Arabia from the point of view of external auditors, financial information users, and auditing control and supervision authorities in Saudi Arabia.
The expected results of the study will determine the following:
- If external auditors in Saudi Arabia are committed to the code of conduct issued by the Saudi Association of accounting public auditors.
- Find out if there is a common agreement upon all of the mentioned ways in the study that encourage external auditors to follow professional behaviour.
- If there is disagreement in point of view regarding the level of importance of ways which encourage external auditors to follow professional behaviour.
- Find a common agreement that international auditing standards and code of conduct are one of the most important ways which encourage external auditors to follow professional behaviour.
- Find out if there is a disagreement between external auditors, and financial information users, and auditing control and supervision authorities point of view, regarding external auditors' commitment with “contacting previous auditor” code of conduct.
Also, this study will be conducted mainly by using secondary sources as it mainly involves the study of an existing situation. Secondary data includes pieces of literature about the code of conduct in Saudi Arabia and the commitment of external auditors.