Influence of personality traits on RAQ behaviour : insights for selecting internal auditors

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Influence of

personality traits on

RAQ behaviour

Insights for selecting internal auditors

Ilse ter Linden, MSc

11160071

15 August 2018

Executive MSc of Internal Auditing

Amsterdam Business School

Supervisor: dr Bob van Kuijck RA RC

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TABLE

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ACKNOWLEDGEMENT

The last step of this Executive Master of Science of Internal Auditing was an interesting journey that gave me the opportunity to explore personality and RAQ behaviour. These two topics of personal interest really motivated me to start this research, but it is the support of others that helped me to stay motivated along this project.

Firstly, I want to thank the respondents in this study who gave me the input and insights needed for this research.

Secondly, I want to thank my thesis supervisor, dr Bob van Kuijck RA RC. His critical reviews and comments were valuable to me, and guided me throughout this project.

Thirdly, I want to thank my aunt for reviewing my English writing. A mixture of linguistic backgrounds is apparently not always beneficial.

Fourthly, I want to thank BDO for giving me the opportunity to study and to improve myself further. Finally, I want to thank my family who has always been there to support me when I lost my motivation.

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MANAGEMENT SUMMARY

This thesis presents an exploratory research on the influence of personality traits of internal auditors on Reduced Audit Quality (RAQ) behaviour. RAQ behaviour has been widely studied in the literature on external auditing, and consists of seven specific RAQ acts. In addition, several causes that increase the risk of RAQ behaviour have been identified in the existing literature. In contrast to the existing literature, this research focused on the internal audit profession. It was explorative in nature because of limited existing research on the influence of personality traits on RAQ behaviour in internal audit. The research provided insights for selecting internal auditors based on the Big Five personality traits and their influence on RAQ behaviour.

A theoretical framework was constructed first, based on the existing literature on RAQ behaviour in external audit and on the Big Five personality traits. A provisional analysis was carried out on the combination of these topics. This resulted in a reference framework of nine statements on the influence of personality traits on causes of RAQ behaviour that lead to an increased risk of occurrence of RAQ acts, which was used as input to the interviews. The overall results for each statement are depicted in Table 1 and described further below.

Overall result Influence of personality trait on cause of RAQ behaviour Occurrence of cause of RAQ behaviour

Statement 1 Lower scores on openness to experience negatively

influence dealing with

unstructured audit tasks

which can lead to an increased risk of RAQ behaviour.

Mixed Partly

recognised (3/4)

Recognised (4/4)

Statement 2 Lower scores on openness to experience negatively

complex tasks, which can lead

to an increased risk of RAQ behaviour. Mixed Partly recognised (3/4) Recognised (4/4)

Statement 3 Lower scores on

conscientiousness negatively

unstructured audit tasks,

Mixed Partly

recognised (0-2/4)

Statement 4 Lower scores on

complex tasks, which can lead

to an increased risk of RAQ behaviour. Mixed Partly recognised (0-2/4) Recognised (4/4)

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v Statement 5 Lower scores on

influence weaker review

activities and procedures,

Confirmed Recognised (4/4)

Statement 6 Higher scores on

agreeableness negatively

influence identification with

the client, which can lead to

an increase risk of RAQ

behaviour in terms of accepting weak client explanations and superficial review of client documents. Mixed Partly recognised (1-2/4) Partly recognised (1-2/4)

Statement 7 Lower scores on emotional

stability negatively influence identification with the client,

which can lead to an increased risk of RAQ behaviour in terms of accepting weak client explanations and superficial review of client documents.

Mixed Partly recognised (3-4/4) Partly recognised (3/4)

Statement 8 Higher scores on personality sub-trait susceptibility to

stress negatively influence dealing with time budget pressure, which can lead to an

increased risk of RAQ behaviour. Not confirmed Not recognised (0/4) Not recognised (0/4)

Statement 9 Lower scores on personality

sub-trait sensitivity negatively influence organisational

commitment, which can lead

to an increased risk of RAQ behaviour. Mixed Partly recognised (2/4) Partly recognised (3/4)

Table 1. Summary of the results on recognition of the statements in the reference framework by respondents

The field study was based on the theoretical framework and consisted of six interviews with HR professionals or audit managers. The actual situation derived from the field study was compared to the theoretical framework on both personality traits and RAQ behaviour. The respondents were also asked to assess the statements in the reference framework. The results of this analysis showed that the professions of external auditor and internal auditor are different, involving different risks related to audit quality, and different types of RAQ behaviour accordingly.

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vi The field study started with an open-ended question on the desired personality aspects of internal auditors in the selection process. It was found that Big Five personality traits were used to a limited extent in the organisations. The personality aspects mentioned were analysed and resulted in a profile of Big Five personality traits that is important to consider when selecting new internal auditors. The Big Five personality traits found to be important were extraversion and sub-trait assertiveness, agreeableness, and conscientiousness and sub-trait proactiveness.

Besides a personality profile, the field study also provided insights into the most important RAQ acts in internal auditing according to audit managers. These were (1) not standing firm in discussions with the client or the auditee, (2) not questioning auditees in depth, (3) too much focused on keeping a good working relation with auditees, (4) not able to transmit a message effectively, (5) no accuracy in documenting audit files, and (6) too focused on details. Two RAQ acts from the reviewed literature on external auditing have also been recognised, namely (7) accepting weak client explanations and (8) superficial review of client documents.

Moreover, the causes of RAQ behaviour included in the statements of the reference framework provided insights into the causes at risk in internal auditing. The main causes of RAQ behaviour in internal auditing were found to be (1) weaker review activities and procedures, (2) dealing with unstructured tasks, (3) dealing with complex audit tasks, and (4) less organisational commitment. Time budget pressure was not found to be at risk in internal auditing. Identification with the client showed mixed results. It was stated that identification with the client could either be a risk, or a way to create openness in discussions with the client or auditee. These results are depicted in the last column in Table 1.

The third column of Table 1 also depicts the results of audit managers’ assessment of the influence of specific personality traits on causes of RAQ behaviour. It was found to be a challenging task for the respondents to assess the influence of Big Five personality traits. Overall, the personality traits are important to consider, but results on the influence and scores were mixed. Positive and negative influences of personality traits were mentioned, as well as preferences for high and low scores depending on the cause of RAQ behaviour. No clear conclusion could therefore be drafted to complement the personality profile of internal auditors.

The personality profile, RAQ acts, and causes of RAQ behaviour applicable to internal auditing are useful because they provide direction for selecting internal auditors with the aim of increasing quality and added value of the IAF. This research also resulted in practical implications for HR professionals and audit managers. Firstly, assessments based on Big Five personality traits should be formalised in the selection process because they provide useful insights into the candidate with respect to the position applied for and career development in the whole organisation. Secondly, HR professionals should be more involved in selection processes because of their affinity with personality traits and implications for quality of work. Discussions between HR professionals and audit managers on personality and RAQ behaviour can increase human capital in the IAF and the organisation. Thirdly, audit managers’ awareness and understanding of RAQ behaviour should be augmented to provide useful input to discussions between audit managers and HR professionals. Moreover, this eventually results in increased audit quality.

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CHAPTER 1. INTRODUCTION

1.1 RESEARCH MOTIVATION

Until 1990, there had been limited academic research on internal auditing in comparison to external audit (Endaya & Hanefah, 2013). The focus in academic literature has therefore mostly been on behaviour and personality traits of external auditors instead of internal auditors (Paresi & Van Kuijck, 2016). Internal and external auditing are to a certain extent comparable professions. Some aspects of the work are similar in the two professions (Endaya & Hanefah, 2013). However, because of differences such as positioning of the function outside or inside the organisation, responsibilities inherent to the function, formalisation of each profession, and an increasing importance of the internal audit profession itself, it is valuable to extend research on personality traits and behaviour to internal auditors.

Reduced Audit Quality (RAQ) behaviour is a type of behaviour that has been extensively studied in the external audit profession. If the work of an auditor can be divided into three activities, namely (1) information search, (2) decision-making and (3) reporting (Biggs, Mock, & Watkins, 1988; Paresi & Van Kuijck, 2016), RAQ behaviour can be considered at all stages. As the audit activities are comparable for both internal and external auditors, it is expected that RAQ behaviour is also an issue in internal auditing. Coram, Ng, and Woodliff (2000) defined RAQ behaviour as ‘the intentional actions taken by an auditor during an engagement which reduce evidence-gathering effectiveness inappropriately’. This definition applies to all three audit activities. What is inherent to the term, is that RAQ behaviour will lead to lower audit quality. In the literature, seven distinctive acts of RAQ behaviour were identified by Coram, Glavovic, Ng, and Woodliff (2008). This behaviour can be the result of several factors, such as time and budget pressure, experience and personal characteristics of auditors. The RAQ acts and factors that influence RAQ behaviour are studied in the second chapter of this thesis.

In addition to this, there is an extensive amount of academic research on personality and personality traits in a professional environment. The personality traits used to formulate the statements that are tested in this research are defined as the Big Five, being (1) openness to

experience, (2) conscientiousness, (3) extraversion, (4) agreeableness, and (5) neuroticism or emotional stability, (McCrae & Costa, 1987; Costa & McCrae, 1992). The Big Five model is derived

from the original five-factor model designed by Tupes and Christal in 1961 and replicated by Norman in 1963. The difference between the two models is that culture has been replaced by openness to experience in the final model (McCrae & Costa, 1987). These personality traits have been studied in research focusing on both the internal auditor (e.g. Paresi & Van Kuijck, 2016) and the external auditor (e.g. Bealing, Baker, & Russo, 2006). Personality in relation to RAQ behaviour has also been subject to research, although not explicitly in terms of the Big Five personality traits. The theoretical background on the influence of personality on RAQ behaviour is incorporated into the theoretical framework in the next chapter. Both concepts of RAQ behaviour and personality are combined and analysed to define the statements to be tested in this research.

My personal motivation to do this research is based on the fact that I have always been interested in personality traits and the influence of personality on behaviour, both in a private and professional environment. Besides external factors that influence our behaviour, part of our behaviour is directly related to our personality. I find it very interesting to notice how our behaviour is supportive in certain situations and undermining our actions or goals in others. In my work as an internal auditor, I find it interesting to notice how personality traits help or challenge the effectiveness of work. From my own observations, there are differences between auditors with respect to the extent to which documentation is collected and the audit trail is recorded. The way

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2 people make decisions also differs from one person to another. Some people make quick decisions, while others need more time to think before deciding. I also perceive the effect of different personalities in auditors’ communication styles with auditees or managers, in which the effectiveness of communication is influenced by personality traits of all respondents.

The aim of this research is to contribute to academic research on internal auditing and to the internal audit profession by providing insights into the influence of personality traits of internal auditors on RAQ behaviour. On the one hand, these insights will serve academic purposes by extending existing research and by encouraging additional research on personality traits of internal auditors. On the other hand, the results contribute to the internal audit profession by giving insights into how personality traits influence RAQ behaviour and into the awareness of HR professionals or audit managers on this issue. Insights resulting from this research can eventually be incorporated in selection methods, with the aim of increasing the added value of the Internal Audit Function (IAF) to the organisation by selecting the most suitable auditors. Additionally, if internal auditors are aware of the likely influences of their personal traits on RAQ behaviour, it may be possible to prevent the occurrence of these acts. As such, knowledge about personality and its influence on behaviour can be included in planning and training with the aim of increasing audit quality.

1.2 PROBLEM STATEMENT AND RESEARCH QUESTIONS

Academic research on personality and RAQ behaviour has focused mainly on external auditors. This research reveals that professional behaviour is actually influenced by personality traits. As will be shown in the second chapter, personality distinguishes one person from another and leads to behaviour that is consistent over situation and time. This suggests that personality can be perceived as a constant factor influencing RAQ behaviour. Existing research on RAQ behaviour contributed to the external audit profession by improving audit methods and thereby increasing audit quality, with the aim of eventually increasing stakeholder’s confidence in the audit profession (Junaidi, Miharjo, & Hartadi, 2012; Sanusi, Supar, Iskandar, & Sari, 2010). For internal auditing, it is useful to provide insights into the influence of personality traits on RAQ behaviour to increase audit quality and to include this in the selection process of internal auditors to stimulate the added value of the IAF for the organisation. By combining insights into personality traits and their influence on RAQ behaviour, it is possible to identify situations in which the risk of occurrence of RAQ behaviour is higher, and to undertake possible action accordingly.

The following problem statement is leading in this study:

How can insights into the influence of personality traits of internal auditors on RAQ behaviour be incorporated into selection methods to increase the quality of the internal audit staff?

Accordingly, three sub-questions were defined to answer the main question:

1. What is the expected influence of Big Five personality traits on RAQ behaviour in internal auditing?

2. What is the role of HR professionals or audit managers in selecting internal auditors with respect to personality traits and RAQ behaviour?

3. What are the main risks on audit quality identified by HR professionals or audit managers?

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1.3 RESEARCH METHODOLOGY

The existing literature on the influence of Big Five personality traits on the occurrence of RAQ behaviour in internal auditing is limited. However, there is a substantive amount of literature on personality of internal and external auditors and on RAQ behaviour in the field of external auditing. A combination of these subjects suggests that personality also influences RAQ behaviour in internal auditing.

This research is aimed at exploring the relationship between personality traits and RAQ behaviour in internal auditors. There are no readily available hypotheses and measurable variables on internal auditing because of the limited amount of studies on the combination of both subjects. The most suitable type of research in this situation is therefore explorative in nature. Exploratory research is characterised by the objective to gather qualitative data. Suitable methods to gather qualitative data are observation, open-ended interviews and focus groups (Hildreth & Aytac, 2007). The results of the study can be used as a first step towards quantitative data analysis.

The research methodology used for this thesis consists of two parts. The first part is a review of the existing literature on RAQ behaviour and personality traits. The resulting insights are captured in statements on the influence of personality traits on RAQ behaviour in internal auditors. The statements are structured on three types of variables that emerged from the existing literature. The first type of variables is formed by personality traits, consisting of five personality traits and 21 sub-traits. The personality traits are considered to be independent variables. The second type of variables, intermediate variables, are based on causes of RAQ behaviour identified in the literature. In total, 12 causes were identified, out of which seven variables were included in the statements. Finally, RAQ behaviour is included as a dependent variable and comprises RAQ acts that emerged from the literature. The statements were formulated by using the following format:

Statement … Higher/Lower scores on <Personality (sub-)trait> negatively influence <cause of RAQ behaviour>, which can lead to an increased risk of RAQ behaviour (in

terms of <RAQ acts>).

The second part of the research methodology is a field study in which the statements formulated in the first part of the research were used as a starting point to shape the interview questions for HR professionals or audit managers that recruit internal auditors. HR professionals were selected to explore the influence of personality traits on RAQ behaviour because it is expected that they can provide the most informative and objective perspective. As will be shown in the next chapter on RAQ behaviour, measuring audit quality and RAQ behaviour is challenging. This is partly due to the fact that internal auditors are more likely to provide socially desirable answers to questions on RAQ. Because HR professional are not involved in the audit work, their answers on RAQ behaviour are supposed to be more objective and therefore more useful in this research. HR professionals are furthermore expected to have more affinity with personality traits and measures of personality. In situations where the HR department are less involved in the selection process, interviews will be held with audit managers. As suggested by Hildreth and Aytac (2007), open-ended interviews are one of the most suitable methods for exploratory research with the objective to gather qualitative data. This type of interviews is semi-structured, which is characterised by a predefined agenda of topics to be discussed while leaving room for spontaneous narratives (Figgou & Pavlopoulos, 2015). The research model and methodology were inspired by descriptions provided by Verschuren and Doorewaard (2015). As such, the starting point of the research was provided by the objective of the research (part 4 in Figure 1.1), and the methodology incorporated in the other parts of the model derived therefrom. The first part of the model depicted in Figure 1.1 illustrates the theoretical

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4 framework by two main streams of academic literature: research on RAQ behaviour on the one hand, and research on personality traits on the other hand. The theoretical framework on RAQ behaviour is mainly related to the external auditor in existing research. However, the theoretical framework on personality traits is related to both the external and internal auditor. These frameworks result in statements on the influence of personality traits of internal auditors on RAQ behaviour that constitute the reference framework used in the second part of this research. This is reflected in part 2 of the research model in Figure 1.1. Part 3 of the model consists of the field study itself and is based on interviews with HR-professionals or audit managers. The aim of this part is to establish to what extent HR professionals or audit managers currently use personality in their selection methods of internal auditors. The interviews were furthermore used to gain insights into how the respondents perceive the statements on the influence of personality traits on RAQ behaviour. The results of the interviews were subsequently used to provide insights into how knowledge of personality traits and RAQ behaviour can be incorporated in selection methods of internal auditors to increase the quality of the internal audit staff. This is reflected in part 4 of the model. The first three parts of this research model are related to the sub-questions of this research, the last part is reflected in the central research question.

3 4 2 1 Theoretical framework RAQ behaviour Theoretical framework Personality and personality traits Internal auditors External auditors Reference framework on influences of personality traits on RAQ behaviour 9 Statements Current situation in selection process of internal auditors by HR professionals or audit managers Recommendations to incorporate the influence of personality traits of internal auditors on RAQ behaviour in selection methods to increase quality of the internal audit staff Figure 1.1. Research model

1.4 OUTLINE

The chapters of this thesis are aimed at answering the sub-questions of this research and eventually result in answering the central research question. The outline of the thesis is described below. Chapter 2 provides the theoretical framework based on a review of the existing literature on RAQ behaviour and personality and by which the first sub-question is answered. The chapter is divided in five sections. It starts with an introduction. It subsequently describes the theoretical framework that is used to classify the reviewed literature. Section 2.3 and Section 2.4 provide substance to this theoretical framework. Section 2.3 first deals with RAQ behaviour and subsequently with the concept of audit quality, types of RAQ behaviour and causes of RAQ behaviour. Personality is elaborated in Section 2.4, with an explanation of the concepts of personality and personality traits, including the Big Five model. Section 2.4 ends with an analysis of the existing literature on personality and RAQ behaviour together. The objective of this analysis is to define statements on the expected influence of Big Five personality traits on the risk of occurrence of RAQ behaviour. The statements constitute the reference framework used as a starting point for the interviews with HR professionals or audit managers to analyse current selection methods of auditors. Chapter 2

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5 results in answering the first sub-question: What is the expected influence of Big Five personality

traits on RAQ behaviour in internal auditing?

Chapter 3 presents the field study conducted in this research. It starts with an explanation of the research methodology used. The selection of organisations for the interviews and interview questions are described in detail. Then the results from the interviews with HR professionals and audit managers are provided. The goal of this chapter is to answer the second and third sub-questions: What is the role of HR professionals or audit managers in selecting internal auditors

with respect to personality traits and RAQ behaviour? And: What are the main risks on audit quality identified by HR professionals or audit managers?

Chapter 4 provides an analysis of the results from the field study. The data extracted from the interviews with HR professionals and audit managers is examined in relation to the theoretical framework provided in Chapter 2 and the statements that were formulated accordingly. The limitations of the research are also discussed in this chapter. Based on this analysis, the chapter concludes with an answer to the central research-question of this thesis: How can insights into the

influence of personality traits of internal auditors on RAQ behaviour be incorporated into selection methods to increase the quality of the internal audit staff?

Chapter 5 draws conclusions about the research by summarizing the main findings of this thesis. Finally, suggestions are provided for further research on personality traits of internal auditors and RAQ behaviour that have been identified during the literature review and throughout the fieldwork.

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CHAPTER 2. THEORETICAL FRAMEWORK

2.1 INTRODUCTION

This chapter describes the theoretical background that is needed to formulate the statements on the expected influences of personality traits on RAQ behaviour. The objective of this chapter is to answer the first sub-question of this research:

1. What is the expected influence of Big Five personality traits on RAQ behaviour in internal auditing?

To answer this sub-question, two other underlying questions arise that should be answered first. These are:

1a. What is RAQ behaviour in the audit profession? 1b. What are the Big Five personality traits?

The chapter concludes with a set of statements on the influence of personality traits on RAQ behaviour. These statements form a reference framework that considers the most suitable personality profile of internal auditors from a RAQ perspective and is the result of the theoretical framework. The reference framework that results from this chapter is used to analyse the current situation of selecting internal auditors by HR professionals or audit managers.

Section 2.2 of this chapter provides the point of departure for the rest of the chapter with a theoretical framework that considers three areas of the audit work. This theoretical framework was used to classify the existing literature that focuses mainly on external audit. A link with the internal audit profession based on this literature is also made in this section. The theoretical framework is elaborated further in the third and fourth section.

Section 2.3 starts with a review of the literature on audit quality and RAQ behaviour, in which the subject of study is mostly the external audit profession. Subsequently, the different types of RAQ behaviour are explained. The section concludes with causes of RAQ behaviour identified in the literature and an answer to sub-question 1a.

Section 2.4 considers personality of the auditor, and personality traits in particular. The aim of this section is to answer sub-question 1b and the first sub-question of this research. It starts with the literature on personality and on the Big Five personality traits. It subsequently elaborates on research in which personality and RAQ behaviour were combined. This is used to define how the Big Five personality traits are expected to influence the occurrence of RAQ behaviour. An analysis is made for each Big Five personality trait in relation to the causes of RAQ behaviour identified in Section 2.3.

Section 2.5 concludes this chapter with a summary of the main findings on RAQ behaviour and personality. These findings result in a set of nine statements on the expected influence of personality traits on RAQ behaviour that were used as starting points for the field study.

2.2 THEORETICAL FRAMEWORK

This section of the chapter is the starting point for the rest of the theoretical framework that is further explored in the next two sections of this chapter on RAQ behaviour and personality traits

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7 respectively. In the existing literature on the audit profession, and on RAQ behaviour in particular, the focus is mainly on the external auditor and on financial auditing, but research on internal auditing is becoming more extensive (Endaya & Hanefah, 2013). In addition to financial auditing, IT, operational and compliance audits have become increasingly important, necessary, or even mandatory to support the internal control system of an organisation. As monitoring the internal activities of an organisation is an important task, it is also important to consider the IAF.

Although internal and external auditing are distinct professions in many ways, the audit work is comparable. In the auditing literature, three major different audit activities can be distinguished, namely information search, decision-making and reporting (Biggs, Mock, & Watkins, 1988; Paresi & Van Kuijck, 2016). These activities are continuously performed by both the internal and external auditor in situations ranging from the planning phase to discussing the final report. The emphasis in the existing literature on RAQ behaviour is mainly on the external auditor, but since the audit activities are in essence identical for both professions, findings are generalisable to internal auditors.

The point of departure for constructing the theoretical framework is a classification provided by Nelson and Tan (2005), who divided the existing literature on auditing judgment and decision-making in three areas that represent a setting that is of special interest to this research. It covers the audit work in general, and RAQ behaviour in particular (see Figure 2.1). The three areas they mention are (1) the audit task, (2) the auditor and his/her attributes, and (3) the interaction

between the auditor and other stakeholders in task performance (Nelson & Tan, 2005).

1 Audit task 2 Personal characteristics of the auditor 3 Interaction with stakeholders RAQ behaviour

Figure 2.1. Three research areas influencing RAQ behaviour

The distinction between these areas is also reflected in other research. For example, Smith (1999) emphasises the importance of personality in decision-making and states that efficient accounting decision-making is determined by three factors: the requirements of the decision task; the knowledge, goals, information-processing limitations and personal characteristics of the decision-maker; and the interaction between decision task and decision-maker. The importance of both context and individual characteristics has also been stressed by Heinström (2003). Besides showing that personality traits influence information strategies, she accentuates the influences of the information seeking context and social interaction between information searchers and others. Section 2.3 elaborates further on the main concepts that were encountered in the academic literature in relation to RAQ behaviour. As such, audit quality itself is considered, as well as the elements that influence audit quality. The section on RAQ behaviour then continues by explaining causes of RAQ behaviour, which are categorised based on the three areas depicted in Figure 2.1. Section 2.4 explores personality, which is part of the personal characteristics of the auditor in the framework above. Section 2.4 also combines the insights into RAQ behaviour and personality in statements to answer the first sub-question of this research.

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2.3 REDUCED AUDIT QUALITY (RAQ) BEHAVIOUR

2.3.1 Introduction to this section

This section provides insights into RAQ behaviour with the aim of answering sub-question 1a of this study: What is RAQ behaviour in the audit profession? Answering this question based on the existing literature on this subject contributes to the formulation of sound statements on the influence of personality traits on RAQ behaviour. To answer this question, it is important to consider the concept of audit quality first, including challenges that have been encountered in assessing audit quality. As this research focuses on the internal auditor, quality elements that are specific to this profession are mentioned in more detail. The section then continues with the types of RAQ behaviour and causes of this behaviour that emerged from the literature. It is shown that RAQ behaviour is an outcome influenced by many factors. Because of the similar nature of audit work, it has a potential to occur both in external auditing and internal auditing. Based on the framework depicted in the previous section (Figure 2.1), RAQ behaviour is influenced by three areas of research. All areas are reflected in this section, but research on personality and personality traits of the auditor is further explored in Section 2.4. As the influence of personality can also be extrapolated to all three areas, it is considered in a separate section. This section concludes with a summary of causes of RAQ behaviour that are evaluated further in Section 2.4 in order to define the statements.

2.3.2 Audit quality

In recent years, audit quality in external auditing received renewed attention due to major scandals such as Enron and Ahold (Junaidi, Miharjo, & Hartadi, 2012; Sanusi et al., 2010). Scandals as a result of reduced auditor independence and the rise of corporate accounting manipulations reduced users’ confidence in audited financial statements; the auditor’s independence, knowledge, skills, attitude and reliability of information became hot topics (Junaidi et al., 2012; Sanusi et al., 2010; Siriwardane, Kin Hoi Hu, & Low, 2014). This resulted in changes in laws and the implementation of international standards, in which corporate governance and ethical behaviour play an important role (Nerandzic, Perovic, Zivkov, & Pascan, 2012). These changes affected the accounting profession as a whole. Nowadays, external auditors must conform to stricter reporting standards, and organisation’s internal control mechanisms and governance have been reviewed. The subject of RAQ behaviour, or RAQ acts, has been studied extensively in research on accountancy and auditing. This behaviour has been labelled as such because it has a negative influence on audit quality, and consequently, affects the reliability of the audit profession.

Reliable information in external audit has been defined as information that is reasonably free from error or bias and faithfully represents what it purports to represent (Lai, Li, Shan, & Taylor, 2013). Standards, regulations and rules of conduct for ethical behaviour have become more established in the external audit profession. The aim of these measures is to increase the quality of the information reported by external auditors, and they therefore contribute to more reliable information to users. However, formal measures do not necessarily result in increased reliability of external auditing. Supervisory bodies and law enforcement are required to ensure compliance with rules and regulation, but it remains a challenging task to control audit quality and the reliability of information. Challenges to measure audit quality have been encountered in existing research on external auditing. Although internal auditing is not as formalised as external auditing, the same issues are applicable. Audit quality and providing reliable information are of great concern to IAFs and included in the standards on internal auditing issued by the IIASB (2017).

Coram, Ng and Woodliff (2000) summarised several facts demonstrating that the evaluation of audit quality and related RAQ behaviour is challenging. False signoff is RAQ behaviour that can easily be assessed based on actual cases in which misstatements were reported, but other RAQ behaviour is

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9 more difficult to evaluate. In research on RAQ, experiments and self-reporting by auditors are mostly used to study the occurrence of this behaviour. Measuring RAQ behaviour based on interviews with auditors can provide useful insights, but the reliability of answers to questions on concrete RAQ acts can be questioned. This type of questions may induce socially desirable responses. Alternatives to measure audit quality have therefore been used, such as audit firm size, number of litigations against auditors, and results from interviews with users of financial statements (Coram et al., 2000). The propensity to issue a going concern opinion while this is not appropriate is also used to measure RAQ behaviour (Junaidi et al., 2012; Sundgren & Svanström, 2014). Kasigwa (2014) used quick review and examination as two dimensions to measure RAQ acts. Another complication particularly related to evaluating RAQ behaviour is important to consider in this research. This complication is due to the fact that each of the acts stated above can directly or indirectly lead to RAQ behaviour. According to Kelley and Margheim (1990), direct acts directly lead to RAQ, such as falsely or prematurely signing-off audit steps without actually having performed the work. In contrast, other acts indirectly result in RAQ. As such, underreporting time is a type of indirect RAQ behaviour that occurs when auditors do not report hours properly. Indirect acts can be influenced by factors that constitute the setting in which a particular audit task needs to be done, and the characteristics of the audit task. This distinction between direct and indirect RAQ acts has been considered throughout the literature review and was used to formulate the statements. It is expected to be of particular relevance in evaluating the influence of personality traits on RAQ behaviour. Personality traits are likely to influence the occurrence of RAQ behaviour either directly or indirectly.

Together with the increase in the number of rules and regulations, standards and the focus on governance and ethical behaviour, the IAF has become an important function in many organisations and even mandatory in some sectors. This is reflected, for instance, in the three lines of defence model for risk management and internal control, which is mandatory for many financial organisations in the Netherlands. Moreover, the reviewed Dutch corporate governance code (2016) has placed the IAF central. The importance of the IAF and the link with external audit have been translated into the professionalisation of internal auditing, although differences exist between the type of supervisory bodies and their authority and the extent of possible consequences of misbehaviour. Users of financial statements are different for external auditing and internal auditing, but providing reliable information is crucial to both professions. The concept of audit quality in the internal audit profession is described further in the next sub-section.

2.3.3 Audit quality in terms of internal auditing

The consideration of audit quality in the internal audit profession is an important aspect for evaluating RAQ behaviour in internal auditors. As mentioned above, intensive regulations and enforcement are applicable to external audit, and these rules set the standard for audit quality (Nerandzic et al., 2012). In contrast, the internal audit profession is not subject to strict quality standards and there is no government regulation on internal audit quality, although having an IAF in place is required by the government in many situations. As such, the Dutch government requires an IAF for organisations in the financial sector. However, it does not set standards for internal audit quality. To define internal audit quality, a reference can be made to the definition of internal auditing provided by the Institute of Internal Auditors (IIA), which can be perceived as the international organisation setting the standards for internal audit quality:

‘Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organisation's operations. It helps an organisation accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes’ (IIA, 2018).

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10 The IIA provides some guidance with respect to the fundamental purpose, nature, and scope of internal auditing, but there is no legal enforcement. According to this definition, the fundamental purpose of internal auditing is to add value. This is specified in more detail by the International Internal Audit Standards Board (IIASB, 2017) in the international standards for the professional practice of internal auditing: “The internal audit activity adds value to the organisation (and its stakeholders) when it provides objective and relevant assurance, and contributes to the effectiveness and efficiency of governance, risk management, and control processes”.

Due to the lack of academic literature on the concept of internal audit quality, Prawitt, Smith and Wood (2009) used six individual components of IAF quality based on SAS No. 65 to measure internal audit quality. This standard provides guidance to external auditors in assessing internal audit quality and IAF’s role in financial reporting. Endaya and Hanefah (2013) built a theoretical framework to assess internal audit effectiveness. This assessment framework is based on the factors that influence internal auditing, namely agency theory, institutional theory, and communication theory. In addition to this, they argue that internal audit effectiveness is directly influenced by the characteristics of internal auditors and the performance of the internal audit department. The characteristics they used in their research are objectivity, effective communication, proficiency and due professional care, and training and development. These characteristics are also reflected in the definition and standards of internal auditing.

In the two sub-sections on audit quality, it has been shown that audit quality is to some extent similar for both internal and external audit professions. Reliable information, independence, objectivity and due professional care are aspects of audit quality that are emphasised in both professions. Based on the similarities with respect to audit quality, it can be concluded that RAQ behaviour has a potential to occur in internal auditing. As such, literature on external audit and RAQ behaviour can be applicable to internal audit. The types of RAQ behaviour and causes of this behaviour are further explored in the next two sub-sections.

2.3.4 Types of RAQ behaviour

Based on the existing literature about RAQ, Coram et al. (2008, p. 127) recalled the definition of RAQ acts as being ‘the intentional actions taken by an auditor that inappropriately reduce

evidence gathering’. In this definition, evidence gathering can be perceived as a somewhat narrow

activity, but it serves as a basis for all audit activities. The concept of RAQ behaviour therefore covers the three audit activities, namely information search, decision-making and reporting. The most common types of RAQ acts are rejecting awkward items from a sample, accepting doubtful audit evidence, and not testing all items in a selected sample (Coram et al., 2000). In another research, Coram et al. (2008) identified RAQ behaviour based on the existing literature and made a list of seven RAQ acts. The seven acts they identified were (1) failure to pursue

questionable items, (2) not testing all items in a sample, (3) failing to research a technical issue, (4) accepting weak client explanations, (5) false signoff, (6) superficial review of client documents, and (7) rejecting awkward-looking items from a sample (Coram et al., 2008). The list

was also summarised by Svanberg and Öhman (2015) in which they refer to inadequately investigating accounting principles, which is closely related to the RAQ act failing to research a

technical issue. In addition to this, they referred to another RAQ act, namely relying in an inappropriate manner on the client’s internal control. This RAQ act has not been included

separately in this thesis because it encompasses other acts related to the client.

Malone and Roberts (1996) studied the frequencies of committing RAQ behaviour in auditors based on six of the RAQ acts mentioned above. They reported the following survey results, which suggests that there is a realistic risk for the occurrence of RAQ behaviour in the audit profession:

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11 - 26% of the auditors never did less work than normal (act 1 and 2),

- 42% never accepted weak client explanations (act 4) - 50% never failed to pursue questionable items (act 1), - 52% never superficially reviewed client document (act 6), - 58% never failed to research a technical issue (act 3), and - 75% of the auditors never falsely signed off (act 5).

The seven types of RAQ behaviour identified are also relevant to the internal audit profession. As mentioned above, information search, decision-making, and reporting are activities performed by both the external and internal auditor. These three audit activities can be related to each of the RAQ acts stated above, in which some are more directly associated with one specific audit task and others consist of a combination of tasks.

As RAQ behaviour can be a point of concern in the IAF, it is interesting to investigate causes and consequences of RAQ behaviour identified in the literature on external audit and relate this to internal auditing. To illustrate the causes of RAQ behaviour, the theoretical framework in Figure 2.1 has been extended to include the causes of RAQ behaviour related to the audit task, personal characteristics of the auditor, and interaction with stakeholders. The resulting framework is represented in Figure 2.2 and is explained in more detail in the following section.

2.3.5 Causes of RAQ behaviour based on the existing literature

To define how personality traits influence RAQ behaviour, it is essential to create a framework including factors that have a reducing or increasing effect on the occurrence of RAQ behaviour. Figure 2.2 gives an overview of the theoretical framework of RAQ behaviour and personality traits revealed by the literature study. The arrows in the middle of the figure show the causes of RAQ acts that have been identified by academics. Each arrow represents one of the three areas of research as provided by Nelson and Tan (2005), namely (1) the audit task, (2) personal characteristics of the auditor, and (3) interaction with other stakeholders.

This sub-section describes the causes of RAQ behaviour in each of the research areas. The influence of personality traits falls logically in the second part of this framework, the auditor’s personal characteristics, as personality characterises each auditor. However, personality traits influence behaviour in a general sense and RAQ behaviour in particular. It is therefore expected that personality traits play a role in several of these factors, which is illustrated by the position in top of Figure 2.1. The concept of personality is explored in Section 2.4 of this chapter.

Coram et al. (2008) described four points of focus that establish the background of RAQ behaviour, namely (1) the extent of RAQ behaviour, (2) the position or function in which RAQ behaviour is more prevalent, (2) causes and reasons for committing RAQ behaviour, and (4) the audit areas in which the occurrence of RAQ acts is more frequent. These subjects were used as a guidance to review the existing literature on RAQ, but the final classification in this thesis was made based on the three areas of research.

Each of these areas is discussed in more detail below by identifying results from previous studies. Based on the existing literature, it can be said that all three areas are closely related to each other. In many studies on RAQ behaviour, a combination of factors from different research areas is used to identify possible influences on RAQ acts. The findings from research mentioned below are therefore placed in the most appropriate category. However, there is some overlap because these categories are not strictly delineated.

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12  Time budget pressure  Audit risk related to task  Nature of the audit (i.e. structured audit or not)  Task complexity  Number of assignments  Identification with the client  Audit organisation and team  Review procedures and activities  Organisational commitment  Natural characteristics (age, gender)  Cognitive characteristics (education, skills, knowledge)  Position, role and responsibilities  Personality 1 Audit task 2 Auditors’ Personal Characteristics 3 Interaction with Stakeholders Audit phases Information search Decision making Reporting RAQ Behaviour Rejecting awkward‐ looking items from a sample Failure to pursue questionable items Not testing all items in a sample Accepting weak client explanations False signoff Superficial review of client documents Failing to research a technical issue Personality traits Agreeableness Extraversion Conscientiousness Emotional stability Openness to experience Competitiveness Focused on others Trusting of others Accommodating of others Systematic approach Self-discipline Control Motivation to perform Pro-activeness Sensitivity Susceptibility to stress Self-confidence Tolerance of frustration Enthusiasm

Sociability EnergyAssertiveness

Innovation orientation Intellectual Self-reflection Openness to change

Figure 2.2. Theoretical framework illustrating the influence of personality traits on RAQ behaviour

1. The audit task

With respect to the first area of research, the audit task, several topics that cause RAQ behaviour were examined. The most important topics are time budget pressure, level of risk of error on a task, nature of an audit, complexity of a task and number of assignments. Each topic is shortly discussed below.

Existing research has shown that time budget pressure has a significant positive association with RAQ behaviour, also called dysfunctional audit behaviour (Al Kautsar, 2016; Coram et al., 2000; Coram, Ng & Woodliff, 2003; Ettredge, Fuerherm & Li, 2014; Kelley & Margheim, 1990; Lambert,

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13 Jones, Brazel, & Showalter, 2017; Sanusi et al., 2010; Svanberg & Öhman, 2013; Svanberg & Öhman, 2015). In addition to this, Coram et al. (2000) proved that a lower level of risk of error in a task is associated with a higher level of RAQ behaviour. They concluded with the fact that, under time budget pressure, individuals will adopt the least risky choice and focus on the most important information. These results may also be applicable to internal auditors as the audit plan may lead to time budget pressure, and decisions are supposed to be made based on risk assessments, such as a risk-based audit plan.

The nature of an audit is another subject of research on RAQ behaviour. The term ‘nature’ is used here because it encompasses characteristics of the audit. The type of audit (i.e. financial, operational, IT, compliance audits) defines the nature of an audit with respect to audit methodology, audit activities and reference framework used, which may vary from one audit to another. Raghunathan (1991) found evidence that testing internal controls was most at risk for RAQ behaviour, which is due to differences in methodologies and documentation of the audit trail. Internal control testing, such as IT, operational and compliance testing are often performed by internal auditors and as such, this is a relevant finding for IAF quality. The absence of clear references and decision aids can also increase RAQ behaviour, as well as non-conformance with quality standards and review procedures (Gul, Wu, & Yang, 2013; Nelson & Tan, 2005). Abdolmohammadi and Wright (1987) found significant differences in decision performance between experienced staff and less experienced staff in dealing with unstructured tasks. They found that more experienced staff perform better in decision-making, and they underscore the need for using experienced auditors in studies on audit quality and decision-making in complex settings. Based on this, it can be said that a more structured nature of the audit task, in which a clear reference framework is available to facilitate the development of an audit methodology, leads to increased audit quality. This is particularly relevant for the IAF, as it performs audits of different natures, which differ in structure.

Unstructured tasks are closely related to complex tasks. Alissa, Capkun, Jeanjean and Suca (2014) also studied the impact of task complexity, experience of the auditor, and effort on audit performance as a measure of audit quality. They found that task complexity moderates the positive relationship between auditor effort and audit performance, meaning that task complexity can decrease audit quality and increase RAQ behaviour. Moreover, Alissa et al. (2014) found that higher experience levels lead to higher performance when task complexity is high.

The number of assignments an auditor performs for different clients is found to have a negative influence on audit quality (Sundgren & Svänström, 2014), although this was not supported in every study (Persson, 2011). Therefore, there is some uncertainty as to the influence of the number of assignments on reduced audit quality. Moreover, the number of assignments is not necessarily expected to have an influence on RAQ behaviour in internal auditing based on the assumption that most of the IAFs perform activities for one client. This finding is therefore disregarded in this thesis on internal auditing.

To summarise, it has been found that time budget pressure, low level of risk of error, less structured nature of an audit, and complexity of the task are factors that have a negative influence on the occurrence of RAQ behaviour. The number of assignments is not relevant to the internal auditor, but the other four factors are. These were therefore considered to formulate statements on the influence of personality on RAQ behaviour in this thesis.

2. Personal characteristics of the auditor

The area personal characteristics of the auditor consists of many research topics with respect to RAQ behaviour. It encompasses studies in which individual differences among auditors in relation to RAQ were examined. Differences can be found in clear and commonly definable aspects to identify

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14 an auditor, such as age and gender, but also in more complex aspects. Complex aspects are less clearly defined and therefore more difficult to quantify, for instance education, experience and position of an auditor in the team or firm.

The results of existing research on age show no clear relation with RAQ behaviour that is of interest to this thesis, as they erroneously used issuing a going concern opinion as an estimate for RAQ behaviour, which is usually not applicable to internal auditing (Sundgren & Svänström, 2014; Persson, 2011). With respect to gender, Gold, Hunton and Gomaa (2009) found evidence that both men and women were more persuaded by a male than by a female client when discussing entry adjustments. Persuasion by the client can occur at different stages during the audit process and is relevant to the internal audit profession, but this study revealed that gender does not play a significant role in influencing RAQ behaviour. It is however an interesting point that auditors should bear in mind when confronted with such a situation. As there are no clear effects of age and gender on RAQ behaviour defined in previous studies, these were not considered in defining the statements for this research.

Other personal characteristics that were studied at the individual level among external auditors are related to cognitive aspects, such as experience, education, knowledge and skills. Tubbs (1992) states that differences in knowledge contribute to differences in behaviour, in which experience determines knowledge and knowledge increases audit quality. Judgement performance was found to be positively related to higher education (Van Kuijck, 1999). Overall, it was found that experience leads to higher audit performance, implying less RAQ behaviour (Alissa et al., 2014; Cahan & Sun, 2015; Gul et al., 2013; Nelson & Tan, 2005; Patten, 2005; Tubbs, 1992; Ye, Cheng, & Gao, 2014). It is very likely that the positive effects of education and experience are also applicable to the internal audit profession.

Research has also been performed on personal characteristics related to the function and position of an auditor in the organisation, as well as corresponding responsibilities. Findings suggest that senior auditors are more likely to engage in premature sign-off than other staff do, and this behaviour was also caused by time pressure, while other staff mentioned only low risk of omitting a step (Raghunathan, 1991). Another finding related to the positioning of the auditor that is of interest to internal auditing, is provided by Kelley and Margheim (1990). They found that junior auditors performed less RAQ acts when the senior was more structured in defining job tasks. Related to this finding, Nerandzic et al. (2012), found that staff employees with less responsibility and accountability were not as much exposed to behaviour pressures in moral dilemmas and consequently were less likely to perform RAQ acts. These findings may also be applicable to internal auditing, because it is expected that every IAF is composed of different functions, with different roles and responsibilities.

Findings on the influence of personal characteristics on RAQ behaviour underscore the importance of studying audit quality at the individual auditor level. Four important findings from the studies mentioned above are important to this research on RAQ behaviour in internal auditors and will therefore be considered in the analysis to formulate the statements. Firstly, more experienced auditors are less likely to engage in RAQ behaviour. Secondly, higher education levels are associated with higher audit quality. Thirdly, a higher risk of RAQ behaviour has been found among senior auditors due to their tasks and responsibilities. Fourthly, senior auditors can have a positive influence on the occurrence of RAQ behaviour in juniors by structuring the job tasks. Personality is another individual characteristic that distinguishes one auditor from another, and some research has been done on the influence of personality on RAQ behaviour and audit quality. As personality is central to this thesis, it is dealt with in Section 2.4 of this chapter. Research on the concept of personality and the Big Five personality traits will be explained there, including the effect of personality on RAQ behaviour.

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15 3. Interaction with stakeholders

In the research area interaction with stakeholders, several possible influences on RAQ behaviour were studied. Auditors interact with the client, or with people from the organisation they work for in case of internal auditors. In addition to this, auditors often work in teams and in an organisational setting that influences the work environment. The main conclusions which were drawn about these topics and which are of interest to internal auditing are discussed below.

In the existing literature, the relationship between the auditor and the client has been widely studied (Cianci & Bierstaker, 2009; Hossain, Monroe, Wilson, & Jubb, 2016; Junaidi et al. 2012; Kraten, 2009; Nelson & Tan, 2005; Smith, 1999; Saito & Tadeka, 2014; Svanberg & Öhman, 2015). Most of the research refers to the incentives that auditors receive, the importance of the client and duration of the contract, and the related effects on audit decisions. Research on the interaction process itself is under-researched, but inclusion of negotiation strategies has become more important in this research topic (Nelson & Tan, 2005).

Support can be found for a positive association between auditors’ identification with the client and RAQ behaviour, based on social identity of auditors (Svanberg & Öhman, 2015). Svanberg and Öhman (2015) conducted a research among auditors from non-Big 4 accountancy firms based on the expectation that a lower turnover rate in these firms in comparison to Big-4 firms, would lead to stronger identification with the client. They concluded that auditors who identify relatively more with a client are more likely to commit reduced audit quality acts. This finding is of particular interest for internal auditing as the IAF is positioned in the organisation which may induce internal auditors to identify even stronger with the client.

Additionally, there is a certain amount of studies on the influence of particularly the internal audit organisation on audit quality. Endaya and Hanefah (2013) stated that internal audit effectiveness is directly influenced by internal auditors’ characteristics and by the performance of the IAF, in which senior management support and existence of effective audit committees have a strong contingent effect on internal audit effectiveness. Alzeban (2015) found that the audit committee plays an important role in IAF quality, and that characteristics of the audit committee positively influence internal audit conformity with internal audit quality standards, such as its independence, expertise of audit committee members, and the number of meetings.

Sanusi et al. (2010) also found a positive effect of organisational commitment and emotional intelligent on audit judgement performance. Organisational commitment is the extent to which people feel appreciated and share beliefs with others from the same organisation. They point to the fact that coping with job stress is critical to organisational commitment, which is interesting in terms of RAQ behaviour in which time budget pressure can have a negative effect on audit quality. Nelson and Tan (2005) defined between-auditor interactions as the most important factor of quality control and staff development, in which organisational and professional commitment play an important role. Within-firm interactions, such as review processes, are important quality control mechanisms in the audit activity. Malone and Roberts (1996) studied several factors that influence RAQ behaviour and found that auditors’ perception of the strength of an organisation’s internal quality control and review procedures, and of the strength of penalties for RAQ behaviour, reduce RAQ behaviour. Review procedures are also important in the internal audit profession, and therefore of interest to this research. As the internal audit profession is less formalised with respect to enforcement and penalisation, the perceived strength of penalties is not included in formulating the statements.

In another research on RAQ behaviour, Coram et al. (2008) provided empirical evidence for the influence of moral intensity on RAQ acts. This study is included in the area of interaction with stakeholders because moral intensity is to some extent related to social consensus and

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16 organisational or institutional settings. Morality is also discussed in the next section on personality, because personal characteristics also influence morality and ethics (Nerandzic et al., 2012). Coram et al. (2008) showed that auditors found all seven RAQ acts introduced in Section 2.3.4 to be wrong, but there were significant differences in their perceptions of magnitude of consequences based on the level of disciplinary action, and of probability of effect based on the perceived likelihood of detection. False sign-off was regarded as having the most severe consequences, followed by not testing all items in a sample, superficial review of client documents, and rejecting awkward looking items from a sample. Curiously, the auditors thought these last three RAQ acts to have the lowest likelihood of detection. They thought that the decisions made by auditors depended on the moral intensity of an issue. The higher the moral intensity of an issue, the less likely it is that an individual will engage in unethical behaviour.

Following the results from research on interaction with stakeholders, a total of five causes of RAQ behaviour could be identified that were relevant to this research. Identification with the client is the first cause of RAQ that is particularly important to consider, because of the IAF’s position in relation to the organisation it serves. Secondly, the existence of a less effective audit committee can lead to RAQ behaviour. Thirdly, less organisational commitment can have a negative effect on audit quality and therefore increase the likelihood of RAQ behaviour. Fourthly, weaker review activities and procedures have been found to increase the risk of RAQ behaviour. Fifthly, a lower moral intensity of an issue as perceived by auditors (low magnitude of consequences and low likelihood of detection) can lead to increased RAQ behaviour. All of these causes are of concern to the internal audit function and were therefore considered in the analysis to formulate statements used in the second part of the research methodology.

2.3.6 Conclusion of this section

This section dealt with the existing research on RAQ behaviour and audit quality. Similarities were found to exist between the external and internal audit professions. A review of the literature on RAQ behaviour was presented based on three areas of research: (1) the audit task, (2) personal characteristics of the auditor, and (3) interaction with stakeholders. The goal of this section was to answer to sub-question 1a: What is RAQ behaviour in the audit profession? Section 2.3.4 and Section 2.3.5 contributed to this answer by showing the types of and causes of RAQ behaviour that were identified in the literature on, in particular, the external audit profession. This background has been translated into and extrapolated to the internal audit profession. Overall, a total of thirteen causes of RAQ behaviour were identified in this chapter that can be relevant for the internal audit profession too. These are of particular interest to this research and therefore considered in Section 2.4 in relation to personality. A summary of the identified causes of RAQ behaviour in the existing literature applicable to internal auditing is provided in Table 2.1 below. In all research on RAQ, personality characteristics of the auditor play an important role. The way people operate in time and budget constraints can lead to stress, and personality is an important factor in coping with stress. In general, personality is influenced by interaction with the client or the auditee, other team members, and other stakeholders. Section 2.4 will provide an explanation of the concepts of personality and personality traits. In addition, the existing literature on the influence of personality on RAQ behaviour is examined in more detail to formulate the statements presented and questioned during the interviews with HR professionals in the field study.