Navigating Ethics: Insights into External Auditor Compliance from Financial Managers and Internal Auditors in Jordanian Companies

Abstract

This study aims to assess to what extent Jordanian external auditors comply with the Code of Ethics for Professional Accountants, as perceived by financial managers and internal auditors. The hypotheses are tested using one sample and an independent sample t-test for a sample of 53 industrial public shareholding companies listed on the Amman stock exchange during 2020–2023. The study utilized the survey instruments to collect the necessary data from 200 participants. The findings show that the external auditor complies with the code of professional ethics at a high to moderate level per the Relative Important Index from the viewpoint of both financial managers and internal auditors. Moreover, the outcomes also show there are no significant variances between their beliefs regarding the adherence of external auditors to the code of ethics. The study consequences indicate that the enacted regulations that organize the work of the auditors can effectively enhance the compliance of Jordanian auditors with the code of professional ethics. Nevertheless, it emphasized the need for more shared efforts for more compliance with professional ethics in the auditing profession. The study suggests Many recommendations to enhance auditors’ compliance such as continuous oversight of auditor compliance from the Jordanian Association of Certified Public Accountants, ethical awareness, research and development in the area of ethics, and training programs to explain ethical complexities. This study assures the importance of enhancing ethical compliance in the auditing profession in an emerging country to increase public trust, attract investment, and improve financial statements integrity.