There are two hypotheses derived by researcher in investigating mechanisms for promoting auditor independence can be implemented regardless of auditor tenure or rotation. First hypothesis was auditors with a stronger versus weaker client identity will agree more with the client preference, but only when professional identity is not heightened versus heighted.
Auditors become too close with their client, can reduce auditors’ independence, objectivity and professional scepticism, finally lower audit quality. Long audit tenure and close auditor client relationships may induce a conflict between the desires to increase auditor knowledge and desires to reduce impaired auditor independence. In short audit tenure, there also possibility that independent in mind influence by strong client identity.
According to (Forehand et al 2002), identity salient represents the extent that an identity is aroused in the mind of an individual. Identity strength represents the extent interrelation between an individual’s norms and value with the identity group. Social Identity theory recommends that the way individuals process information and making decision or judgement should formed by identities. There are many different identities within an individual, and they will make different decisions based on which identity is salient.
Bamber and Iyer(2007) found out that auditor with a strong client identity are more likely to agree with a client preferred accounting treatment. Besides, client identity strength positively related to auditor tenure, client image and importance. It also believes that auditors with stronger client identities will agree with client preferences more, when professional not heightened, this will lead to impaired objectivity. In contrast, auditors with stronger professional identities less agree with client preferences, and increase professional scepticism. Therefore, American Institute of Certified Public Accounts 2012 stated that auditors are bound by rules of professional conduct, example should retain independent in mind when exercise their duty.
(LeBoeuf et al. 2010) was showed that a situation in which identity is salient, an identity strength can decide how greatly individual behaviour aligns with the group identity. An example show in the (LeBouef et al. 2010) illustrates the distinction between identity strength and salience. Students have many identities. Students with a stronger scholar identity were more likely to choose a scholarly item over a social item when the scholar identity was made salient. This example concluded that decision making does not influence by stronger identity unless stronger identity also salient. An auditor with a stronger client identity is more likely to agree with the client when professional identity is not salience. The heightened professional identity salience can influence a stronger client identity by causing the auditor focus less on values of client identity and more on values of their professional identity.
In additional, LeBoeuf et al. (2010) expressly bring out the salience of one identity. Although both client and professional identity salience levels may different, they are likely to be simultaneously salient. For instant, heightened the salience of an auditor’s professional identity, also cannot reduce the effect of client identity strength when client identity salience is high, professional identity salience also is higher, because the client identity remains salient. An auditor’s professional identity salience cannot to further heightened, because it may naturally be at its maximum whenever the auditor engages in auditor duties. Thus, King (2002) argued that should less concern with client influences such as client identity strength.
Contrary, SIT and descriptions of audit practice indicate professional identity salience can vary considerably, so able to heighten professional identity salience can influence auditor judgements. Example’SIT forecasts identity salience is low when attributes are less apparent (Ashfort and Johnson 2011).
Bazer et al. 1997 argued that client identity salience often high because audit tasks are normally couched in term of the client and client preferences are explicitly presented as well a the impact of auditor decisions on the client is vivid. Rousseau (1998) said this is true if the auditor encircled by client cues such as offices, logos, personnel or culture. However, heightened professional identity salience can help auditors to focus on professional identity and independence mind, by causing a conscious identity conflict, without consideration of whether professional or client identity is more salient. (Ashforth et al.2008)
Thence, auditors are influenced by client identity strength when professional identity is not heightened. Auditors with a stronger client identity will agree more with a client preference. Heightening professional identity salience can reduce the influence of client identity strength. Auditors with a stronger client identity will agree less with the client preference when professional identity salience is heightened.
Second hypothesis was auditors will exhibit greater professional scepticism when professional identity salience is heightened versus not heightened. According to (Nelson 2009; Hurtt 2010) questioning mind, suspension of judgment, accumulation of more evidence, and presenting about the validity of an assertion are the auditor behaviours of more scepticism.