EXAMINING THE INFLUENCE OF CONFLICT MANAGEMENT STYLES ON EXTERNAL AUDITORS’ RELIANCE DECISIONS REGARDING INTERNAL AUDIT WORK
DOI:
https://doi.org/10.35631/AIJBES.829023Keywords:
Conflict, External Auditor, Internal Auditor, RelianceAbstract
This study examines whether external auditors' conflict management styles influence their reliance on internal audit work, and whether reliance decisions differ by auditor rank. Drawing on prior work on auditor judgment and professional scepticism, the study extends existing research by focusing on behavioural differences among external auditors rather than only on internal audit attributes such as competence, objectivity, and work performance. Data were collected through a questionnaire survey distributed to 250 audit firms in Wilayah Persekutuan, Malaysia, of which 109 usable responses were received. The instrument included a case-based analytical procedures task and items measuring conflict management styles using the Organizational Communication Conflict Instrument. The findings indicate that external auditors' conflict management styles are associated with their reliance decisions regarding internal audit work. In particular, a flexible working style, interpreted as a more active engagement style, is significantly and negatively related to reliance on internal audit work, suggesting that auditors who are more active in managing disagreement tend to rely less on internal auditors and exercise greater professional scepticism. The results also show differences in reliance judgments by rank: audit managers demonstrated higher reliance on internal audit work than senior executives. This may reflect differences in experience, judgment, and resource considerations across audit positions. The study contributes to the literature by highlighting the role of individual behavioural style in external auditors' reliance decisions, an area that has received limited attention in prior research. The findings have practical implications for audit firms, particularly in auditor training and the development of professional scepticism and effective conflict-handling skills. Future research may adopt experimental methods, include broader organizational variables, and use more representative samples across firms and industries to strengthen understanding of reliance judgments in the Malaysian audit environment.
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