Compliance of External Auditors with the Professional Code of Conduct: A Case Study of Ethiopia

Abstract

The objective of the study was to assess the compliance of external auditors with the code of conduct while discharging their responsibilities, and its effect on the existence of CSR within client organisations in the case of Ethiopia. The study adopted a mixed research approach; cluster sampling was used to categorise the respondents based on their role within the organisation, and probability sampling was used to select the respondents. The findings show that client’s demand for unqualified opinion, pressure from clients to get auditor’s report as soon as possible, strong personal or financial relationship, and manager’s refusal to provide necessary information are some of the constraints that affect external auditor’s compliance with the code of ethics while they perform their activities. Similarly, manager’s doubt that auditor’s report might affect their future, manager’s fear of losing their job, and management’s intention to hide their mistakes are the reasons for management not to provide the necessary information to external auditors. External auditors and management of client organisations should comply with the principles of CSR at a maximum level when they perform their business activities; external auditors should understand that their compliance with the code of conduct is basic to protect the public from corrupt organisations. There should be a strong professional association or authority that controls external auditor’s competence and the compliance of their work with the code of conduct, and management should present all the necessary information.

Keywords: Corporate Social Responsibility, External Auditor, Management, Professional Code, Business Ethics

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