Examining Moral Disengagement as a Threat to Professional Skepticism

Professional skepticism is an essential component of effective auditing, yet in recent years regulators have faulted auditors for insufficient skepticism. To examine what might lead to insufficient skepticism, I explore professional skepticism as a function of moral agency using the theory of moral disengagement (Bandura 1999). The results of two experiments, examining two different causes of moral disengagement—moral justifications and dehumanization—are consistent with predictions from the theory. In the first experiment, I find that creativity, a characteristic desired by audit firms, results in higher levels of professional skepticism. However, in the presence of time pressure, individuals with a creative mindset engage in less professional skepticism as a result of a more creative moral justification process. Experiment 2 examines a second type of moral disengagement, dehumanization. The results suggest that dehumanization increases when firms frame their public interest responsibilities as protecting the ‘capital markets.’ This increased dehumanization ultimately decreases professional skepticism. Alternatively, framing the audit firm’s public interest responsibilities as protecting individuals, specifically the individuals auditors may be more familiar with, increases humanization and professional skepticism. Overall, the results are consistent with the theory of moral disengagement. This study provides a new theoretical framework for understanding potential threats to professional skepticism and the role of moral agency in the execution of the audit