| The internal auditor plays a key role in the internal control structure of many organizations by assisting operating managers and concurrently serving as a watchdog to prevent corporate wrongdoing. The dual nature of this role may result in moral conflict when an internal auditor is called upon to whistleblow.; Accounting ethics researchers have used cognitive-developmental models of moral reasoning to examine the relationship between accountants' moral development level and various judgments, including whistleblowing. These models may be deficient because they fail to consider the impact that contextual variables have on individual decision making.; I examined whether contextual variables impact internal auditors' self-assessed likelihood of whistleblowing. I synthesized a theoretical framework and developed research hypotheses that predict relationships between the self-assessed likelihood of whistleblowing and (1) magnitude of the consequences; (2) channels of communication; and (3) type of wrongdoing. To test these hypotheses, I provided internal auditors (n = 123) with a scenario and asked them to self-assess the likelihood of reporting evidence of a malfacation to their internal audit director even though their audit manager told them to ignore the wrongdoing. I conducted the experiment as a 2 x 2 x 2 between-subjects design and controlled for level of cognitive moral development, gender and socially desirable response bias.; My results suggest that the likelihood of whistleblowing is greater when magnitude of the consequences is high. Also, internal auditors' stated whistleblowing intentions are higher when channels of communication are negative. I found no evidence of a relationship between the likelihood of whistleblowing and type of wrongdoing. As covariates, level of cognitive moral development, gender, and a measure of socially desirable response bias were found to be insignificant.; The results of the study imply that internal auditors are more sensitive to the materiality of an internal control violation than they are to the occurrence of an internal control violation. The findings also suggest that the upward communication of sensitive issues is more complex than that suggested by the Committee of Sponsoring Organizations of the Treadway Commission. |
