Between Country Variations in the Application of the Principle of Auditor Confidentiality: A European Setting

Journal of Accounting Ethics and Public Policy, Vol. 6, No. 1, pp. 1-30, 2006

30 Pages Posted: 19 Feb 2008 Last revised: 1 Jan 2017

See all articles by Donald F. Arnold

Donald F. Arnold

Union Graduate College - School of Management

Richard A. Bernardi

Roger Williams University - Gabelli School of Business; Roger Williams University

Presha E. Neidermeyer

West Virginia University - Department of Accounting and Management Information Systems

Josef Schmee

Union College - Management

Date Written: 2006

Abstract

Proponents of mutual recognition of accounting principles and auditing standards across-borders assume a minimal level of uniformity in the application of basic accounting and auditing standards. Furthermore, international accounting firms proclaim a worldwide uniformity of the services they render. The first goal of this research was to test the existence of such uniformity as it applies to the principle of auditor confidentiality when embedded within an ethical dilemma. The second goal was to examine the uniformity of the factors that influenced the auditor's decisions regarding their implementation of the principle of confidentiality. The third goal was to examine whether between-country differences in the application of auditor confidentiality or the factors that influenced that judgment could be associated with the frequently used cultural constructs identified by Hofstede (1984).

This research examines the importance of confidential information obtained from one client on the audit opinion expressed on a second client. The sample includes 287 partners, senior managers, managers and seniors from international auditing firms located in Denmark, Ireland, Italy, Spain, Sweden, the Netherlands, and the United Kingdom. The analysis indicated the presence of inter-country differences in auditor confidentiality. Our analysis indicates considerable between-country variation in the relative importance of the factors considered when making that decision - with some similarity based on geographic region. The analysis also indicated that the only significant Hofstede cultural construct factor associated with the noted variances was that of masculinity/femininity. The implications of these findings potentially affect the policies and claims relating to between-country recognition of accounting and auditing practices.

Suggested Citation

Arnold, Donald F. and Bernardi, Richard A. and Neidermeyer, Presha E. and Schmee, Josef, Between Country Variations in the Application of the Principle of Auditor Confidentiality: A European Setting (2006). Journal of Accounting Ethics and Public Policy, Vol. 6, No. 1, pp. 1-30, 2006, Available at SSRN: https://ssrn.com/abstract=1094554

Donald F. Arnold (Contact Author)

Union Graduate College - School of Management ( email )

80 Nott Terrace
Schenectady, NY
United States

Richard A. Bernardi

Roger Williams University - Gabelli School of Business ( email )

Bristol, RI 02809
United States

Roger Williams University ( email )

Bristol, RI 02809
United States

Presha E. Neidermeyer

West Virginia University - Department of Accounting and Management Information Systems ( email )

Morgantown, WV 26506
United States

Josef Schmee

Union College - Management

Schenectady, NY 12308-3151
United States

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