The Mediating Effect of Ethical Judgment on the Relationship Between Ethical Orientation and Ethical Decision


Government Internal Auditor Apparatus (GIAA), as a professional organization of government internal auditors, consists of Indonesia’s National Government Internal Auditor (BPKP) and Inspectorate on the level of local government and has a very important role in creating clean, fair, transparent, and accountable governance. Nevertheless, in running its responsibilities and functions, GIAA often faces audit conflicts that lead to a dilemma situation. The audit conflict will become an ethical dilemma when GIAA faces ethical and unethical choices that determine an auditor’s decision-making (Windsor et al., 1995). GIAA as a professional organization is required to be able to make appropriate conclusion from the audit findings based on the applicable code of ethics in the constitution and profession. Ethical decision is a publicly acceptable conclusion, both legally and morally ( Jones, 1991; Trevino, 1986). Several previous studies suggest that there are significant individual and situational factors that influence a person in making decisions ethically (Trevino, 1986). The individual factor that influences one’s determination in facing ethical dilemmas is spiritual and ethical orientation, whereas the situational factor that supports in ethical decision-making is personal ethical judgment. Based on the aforementioned explanation, this study aims to examine the effect of ethical orientation on ethical decision, either directly or through ethical judgement at GIAA of Financial and Development Supervisory Board (BPKP) and Inspectorate East Java Local Government. Test results show that ethical orientation has a significant positive effect on ethical decision; ethical orientation has a significant positive effect on ethical judgment; ethical judgment has a significant positive effect on ethical decision; and ethical judgment mediates the relationship between ethical orientation and ethical decision.



Keywords: ethical orientation, ethical judgment, ethical decision, GIAA

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