The Directional Effects of Discussion on Auditors' Moral Reasoning

Auditors' professional judgements are typically made following a discussion of contentious issues with other auditors (Gibbins and Mason 1988). These discussions may be with others at various levels in the hierarchy of the audit firm, with informal discussion with peers often taking place prior to formal discussions with audit supervisors (see, e.g., Solomon 1987). This study uses an experiment, involving 286 public accountants, to consider how discussion with peers may influence auditors' subsequent resolution of realistic audit-specific moral dilemmas. Auditors were asked to prescriptively discuss how an accountant ideally should resolve a moral dilemma, or to deliberatively discuss how an accountant actually would resolve a moral dilemma. The results showed that auditors have higher moral reasoning scores after prescriptive discussion with peers and lower moral reasoning scores after deliberative discussion with peers. Thus, the study findings point to the significance of discussion of contentious dilemmas with peers and the importance of type of discussion for predicting and explaining auditors' moral reasoning. More specifically, the results indicate that discussion with peers may provide information and/or signal what is important and acceptable to the resolution of a moral dilemma, which facilitates transformation of an auditor's moral reasoning. This suggests the importance of informal mechanisms, such as peer discussion, as part of the social control system in audit firms.