Personality traits of internal auditors : an explorative study into the personality traits of starting and experienced internal auditors

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(1)Personality Traits of Internal Auditors An Explorative Study into the Personality Traits of Starting and Experienced Internal Auditors. University of Amsterdam Amsterdam Business School. Erwin A.P. Mol, MSc. ID number: 6020410 Date: 20 July 2014 Program: Executive Internal Auditing Programme Supervisor: Dr. M.M. Tophoff Co-reader: Dr. S. van Hoek-Gerritsen Thesis.

(2) Personality traits of internal auditors An explorative study into the personality traits of starting and experienced auditors. Abstract Internal auditors are expected to provide reliable information and to act as a trustworthy source. This study examines whether personality trait theory contributes to our understanding of an internal auditor meeting these expectations. Our literature study shows that personality traits can be measured and provides a starting point for certain desirable personality traits for internal auditors. Our pilot study shows that the personality traits of internal auditors in this study differ significantly from a large norm group of high educated individuals, especially experienced internal auditors. We found significant differences between the personality traits of starting and experienced internal auditors. Chief Audit Executives were asked to rank personality traits on level of desirability in an internal auditor and we found reason to believe that there are differences between their expectations and the internal auditors in this study. This study has important implications for both the internal audit community and personality trait research.. Keywords: Internal audit, Audit, Personality traits, Big five traits, Personality trait measurement instruments, Experience level, Desirable traits, Chief audit executives, Internal audit departments. 2.

(3) ACKNOWLEDGEMENT. Writing this thesis is an important step in concluding the Executive Internal Auditing Programme (EIAP), although it certainly is not the end-point in my journey of learning within the internal audit community. This accomplishment and also all further undertakings would not have been and will not be possible without the following persons who I gladly acknowledge.. I want to thank all participants in this study who helped me to provide insights in the personality traits within our community. A special word of thanks goes to the Chief Audit Executives who participated in setting a personality profile of internal auditors.. I want to thank my thesis supervisor, Dr. Michael Tophoff. This thesis would not have been the same without his valuable insights, positive criticism and guidance.. I want to thank my colleagues, fellow EIAP students and EIAP lecturers who proved to be great sparring partners in sharpening my ideas about the role and raison d'être of internal audit.. I want to thank KPMG for investing in my development as internal auditor and providing me the opportunity to study.. Finally and most importantly, I want to thank my wife Elina. Her support, encouragement and patience cannot be measured.. 3.

(4) TABLE. OF. CONTENTS. Acknowledgement ..................................................................................................................... 3 Table of Contents ....................................................................................................................... 4 I. Introduction ........................................................................................................................ 5 I.1. Reason for Studying Personality Traits of the Internal Auditor .................................. 5 I.2. Problem Statement and Research Questions ............................................................... 6 I.3. Methodological Approach ........................................................................................... 6 I.4. Reading Guide ............................................................................................................. 7 II. Personality Trait and Internal Audit Literature Review..................................................... 8 II.1. Introduction ................................................................................................................. 8 II.2. Personality Traits and Traits Measurement ................................................................. 8 II.3. Personality Traits and Job Effects ............................................................................. 12 II.4. Personality Traits and Auditors ................................................................................. 13 II.5. Personality Traits and Adjacent Professions ............................................................. 17 II.6. Conclusion ................................................................................................................. 17 III. Methods Pilot Study among Internal Auditors ................................................................ 18 III.1. Introduction ............................................................................................................... 18 III.2. Sample and Procedure ............................................................................................... 18 III.3. Measures .................................................................................................................... 19 IV. Results Pilot Study among Internal Auditors ................................................................... 24 IV.1. Descriptive Statistics ................................................................................................. 24 IV.2. Description of the Norm Group................................................................................. 24 IV.3. Results of All Internal Auditors in this Study ........................................................... 25 IV.4. Results of Starting and Experienced Internal Auditors ............................................. 27 IV.5. Conclusion ................................................................................................................. 31 V. Methods Personality Profile according to CAEs ............................................................. 32 V.1. Introduction ............................................................................................................... 32 V.2. Sample and Procedure ............................................................................................... 32 V.3. Measures .................................................................................................................... 32 VI. Results Personality Profile according to CAEs................................................................ 33 VI.1. Personality Profile according to Chief Audit Executives .......................................... 33 VI.2. Conclusion ................................................................................................................. 37 VII. Discussion ........................................................................................................................ 38 VII.1. Introduction ............................................................................................................... 38 VII.2. Personality Traits of Internal Auditors ...................................................................... 38 VII.3. Personality Profile according to Chief Audit Executives .......................................... 41 VII.4. Practical Implications for the Internal Audit Community ......................................... 42 VII.5. Contribution to Academic Research.......................................................................... 43 VII.6. Limitations................................................................................................................. 44 VII.7. Future Research ......................................................................................................... 45 VII.8. Summary and Conclusion ......................................................................................... 47 References ................................................................................................................................ 48 Appendix I – Letter to Participants .......................................................................................... 53 Appendix II – Measurement Scales ......................................................................................... 55. 4.

(5) I.. I.1.. INTRODUCTION. Reason for Studying Personality Traits of the Internal Auditor. Society at large and organisational members individually are calling auditors to provide meaningful information. This includes information on factors such as the viability and stability of the organisation, a judgement on whether board statements (e.g. the annual accounts) are correct and a statement on whether management is in-control on material risks. People look at auditors to provide this information because they are traditionally perceived to be a source to be trusted.. Recent events however affected the public opinion and led people to cast doubt on whether auditors are indeed a source which can be trusted. This is especially evidenced by the public debate both in The Netherlands, for example by the research committee installed by Dutch Parliament to research the role of public accountant during the financial crisis (CommissieDeWit, 2010), and abroad, for example by the European Union green paper “Audit Policy: Lessons from the Crisis” leading to new EU regulations (e.g. on audit rotation) (EC, 2010). Also, media are increasingly critical with regards to both external and internal auditors. These recent events provide evidence that the auditors had knowledge about certain compromising facts but choose to either play down or ignore them.. These incidents could perhaps be prevented by assessing the personality traits of internal auditors. In other words, there might be personality traits that make internal auditors more prone to undesirable behaviour. Or, to state it positively, there might be certain personality traits which successful internal auditors have in common and which therefore are desirable in an internal auditor. Personality traits which characterise an internal auditor who finds control deficiencies, is not misled easily and who is able to resist opposition within the three party relationship of auditor, auditee and client. Personality traits are important to study because they ultimately shape behaviour.. Not much research has yet been performed on the desirable personality traits for internal auditors. Church, Davis and McCracken (2008) for instance call for research on the relationship between auditors individual characteristics and the quality of audit reporting.. 5.

(6) Furthermore, personality traits is a much discussed topic in the internal auditing community today.. I.2.. Problem Statement and Research Questions. The leading question of this thesis is: to what extent can we provide evidence to show that internal auditors have distinctive personality traits?. The following research questions will be addressed in order to answer this problem statement: 1 What are personality traits and how are they measured psychometrically? 2 Are there certain personality traits that distinguish internal auditors from other highly educated individuals? 3 Do personality traits differ between starting and experienced internal auditors? 4 Are there indications for desirable personality traits for internal auditors?. I.3.. Methodological Approach. This explorative study will consist of a literature study, a pilot study among internal auditors and a personality profile impression received from Chief Audit Executives and will lead to several hypotheses for future studies (i.e. an inductive method).. I.3.1. Literature review Current literature on measuring personality traits and desired traits in adjacent professions will be studied elaborately to gain understanding of how traits are measured and whether there are desirable personality traits for internal auditors. This literature study will answer research questions one and four.. I.3.2. Pilot study among starting and experienced auditors The personality traits of a group of 113 internal auditors will be assessed and compared to a large norm group of highly educated individuals. The group will be divided in a group of starting internal auditors (0 – 2 years of relevant experience) and a group of experienced internal auditors (> 8 year of relevant experience), which will be compared to both each other and the norm group. This pilot study will answer research questions two and three.. 6.

(7) Rolland and De Fruyt’s (2009) Personality for Professionals Inventory (PfPI) questionnaire will be used to measure 21 personality traits1 and Five-Factor Model (FFM) proxy scores (i.e. emotional stability, extraversion, openness, agreeableness and conscientiousness) (McCrae & Costa, 1987).. I.3.3. Personality profile impression from Chief Audit Executives The understanding of the desired personality traits will be further improved through inquiring Chief Audit Executives. They will be asked to rank the 21 personality traits mentioned above on level of desirability. The personality traits of the internal auditors in this study will be compared to this personality profile. This profile will provide additional insights in relation to research question four.. I.4.. Reading Guide. The remainder of this thesis is structured as follows. Chapter II consists of an elaborate literature study on personality traits of auditors. Chapters III and V will discuss the methodology used in the pilot study and personality profile study, respectively. Chapters IV and VI will state the results of the pilot study and personality profile study, respectively. Chapter VII will conclude this thesis by discussing the results and implications of this study for the internal audit community and provides possible hypotheses for future academic research and internal auditing literature development.. 1. Sensitivity, Self-confidence, Susceptibility to stress, Frustration tolerance, Enthusiasm, Sociability, Energy, Assertiveness, Innovation-oriented & creativity, Intellectual versus action-oriented, Self-reflection, Openness to change, Competitiveness, Being other-oriented, Trusting others, Willingness to accommodate, Systematic and organised approach, Self-discipline, Self-control, Motivation to perform, Pro-activeness. 7.

(8) II.. II.1.. PERSONALITY TRAIT. AND. INTERNAL AUDIT LITERATURE REVIEW. Introduction. This chapter will provide answers to our research questions “what are personality traits and how are they measured psychometrically?” and “are there indications for desirable personality traits for internal auditors?”. We will do so by first assessing what personality traits are and how they can be measured psychometrically. Second, we will discuss literature on personality trait effects on work-related outcomes. Third, we will discuss literature on personality traits in relation to auditors and fourth examine the same in relation to adjacent professions.. II.2.. Personality Traits and Traits Measurement. To start, what really is a personality trait? Pervin (1994) defines a personality trait as “a disposition to behave expressing itself in consistent patterns of functioning across a range of situations” (Pervin, 1994, p. 108). Adhering to this definition implies that personality traits can be an important factor in understanding behaviour in various circumstances. A large longitudinal study examining personality stability in relation to age for both men and women provides evidence for the view that personality traits become stable for individuals in their 30s and remain stable when they get older (Terracciano, McCrae, & Costa, 2010). Furthermore, it was found that nature has far more effects on personality compared to nurture. McCrae et al. (2000) show in their literature study how different research streams come to the same conclusion that personality traits are hardly influenced by environmental factors. As an example, evidence from adoption studies shows that the personality of adopted children is not influenced by its adoptive parents or siblings, showing the lack of family influences effects (Plomin, Corley, Caspi, Fulker, & DeFries, 1998). Johnson, Vernon and Feiler (2008) provide an overview of over 50 years of research showing the strong relationship between genetics and personality. However, external factors should not be excluded in whole as there is evidence that traits can be altered due to life experiences through the process of neural plasticity, or in other words, experiences may alter the brain which in turn may alter personality (C. A. Nelson, 1999).. As the discussion above implies, personality traits can indeed be measured. As an overview, personality traits can be measured either through self-reports, informant reports (reporting by. 8.

(9) others) and behavioural assessments through observation, where combining these methods, i.e. triangulation, lead to the most reliable results (McDonald, 2008). A summary of the advantages and disadvantages of the various methods is provided in Table 1.. TABLE 1 Advantages and Disadvantages of Methods of Personality Measurementa Method Self-Reports. Advantages        . Informant Reports. Disadvantages. Practical and efficient Convenient and easy to administer Inexpensive Direct insight into unique personal information Individual motivation to respond Can control most response biases Many readily available psychometricallytested inventories Most commonly used method.  Can provide objective information about a target  Potential to be practical, inexpensive and convenient (e.g. Internet)  Multiple raters and aggregation of data can lead to reliability of results  Others can provide insights on behaviour, especially across-situations  No socially desirable response bias.  Directly examines behaviour, which is central to examining personality  Can get situation-specific information  Fewer response biases than with questionnaires  Two potential settings: lab or field (which carry different pros and cons)  Same strengths as above Multiple  Added advantage of the improvement of Methods construct validity  Can answer more research questions and lead to richness of data, especially if part of a triangulation or ‘mixed methods’ strategy a McDonald (2008, p. 18) Behavioural Methods.  Potential issues with credibility of responses (due to response biases): o Socially Desirable Responding o Acquiescent Responding o Extreme Responding  Assumes that respondents are selfknowledgeable and do not have distorted self-perceptions (debates involved with using)  Issues with non-context-specific language use of questions  Cultural limitations  Less efficient and more effort required to obtain third-party data than to simply ask the target  Similar response biases to self-reports (e.g. Acquiescent and Extreme Responding)  Issues with choosing informants – possibility for biases based on relationship or research aims  Others cannot access certain personal information about target  Difficult to assess situation-specific  Behaviour  Least practical and convenient method  Ethical concerns  Involves complex coding schemes  Expensive in time and money  Possible disconnection between  behaviour and specific traits  Same weaknesses as above  Requires more effort, money, resources, time and training to implement. II.2.1. Psychometric assessment tools The study of personality traits has been a popular research field for quite some time. However, it took decades of research to come to a consensus on what taxonomy of personality. 9.

(10) traits should be measured (John & Srivastava, 1999). Nowadays, the best researched model of personality traits is the five-factor model (Big Five) of personality. Here, persons can be classified according to five personality traits: distinguishing emotional stability, extraversion, openness, agreeableness and conscientiousness. These factors can be assessed by statistically valid and reliable questionnaires such as Costa and McCrae’s (1992) Revised NEO Personality Inventory (NEO PI-R), McCrae & Costa’s (2004) to 60 items shortened NEO Five-Factor Inventory (NEO FFI) and Rolland and De Fruyt’s (2009) Personality for Professionals Inventory (PfPI). Recently, debate has risen whether the big five traits are uncorrelated traits or whether there are meta-traits which exist above the big five (Alessandri & Vecchione, 2012). Factor analysis led to two higher-order traits being Stability, with shared variances of emotional stability, agreeableness and conscientiousness, and Plasticity, with shared variances of extraversion and openness (McCrae, et al., 2008).. Figure 1 depicts the relationship between the five factors (basic tendencies) and personal characteristics. In line with our earlier discussion, the five-factor model assumes explicitly that these basic tendencies are biologically or nature based but leaves room for some external or nurture effects.. FIGURE 1 A Representation of the Five-Factor Theory Personality Systema. a. McCrae & Costa (1999, p. 76). 10.

(11) Other psychometric measurement scales measuring personality traits but not leading to the big five traits include DISC, Myers-Briggs Type Indicator (MBTI) and Enneagram. We will discuss these one by one. The DISC assessment is claimed to be based on Marston’s (1928) DISC theory measures four behavioural types: dominance, inducement, submission and compliance. We found this assessment unfitting for the purpose of this study as there were no scientific studies performed to substantiate the claim that this assessment indeed measures Marton’s behavioural types.. The MBTI (Myers, McCaulley, Quenk, & Hammer, 1998) also measures behavioural types and claims to be based on Jung’s (1923) typological theory on the dichotomies extraversion versus introversion, sensing versus intuition, thinking versus feeling, judging versus perception. However, even stronger opposition compared to DISC is found in relevant research studies on the MBTI. Multiple researchers conclude that there is no scientific basis for the MBTI assessment (e.g. Hicks, 1984; Schriesheim, Hinkin, & Podsakoff, 1991).. The Enneagram (Riso & Hudson, 1996) assessment measures nine roles an individual can take, the role of: reformer, helper, achiever, individualist, investigator, loyalist, enthusiast, challenger, peacemaker. As with the DISC and MBTI, no scientific evidence is found in academic literature for this test (e.g. Edwards, 1991).. Based on the above discussion led us to the conclusion that only the NEO PI-R, the NEO FFI and the PfPI would be potential suitable measurement instruments for the current study. The NEO FFI was unsuitable because it only measures the big five traits and not several personality trait subsets. We chose to apply the PfPI because it was developed to measure traits including the big five traits in a work-related context. Multiple studies (e.g. Mlinarić & Podlesek, 2013; Schmit, Ryan, Stierwalt, & Powell, 1995) showed that measurement scales with context-related items have a higher predictive value. Furthermore, it measures well known big five traits which will not only enhance comparability to other studies but also provide solid scientific grounds to this current study. As discussed above, much research has been performed on the big five traits and the existence of these five domains is confirmed in multiple studies. Most importantly, the PfPI has been statistically validated and is proven to be a reliable measurement with strong correlations to the popular NEO PI-R. Correlations between the PfPI’s five-factor model scores and the corresponding NEO PI-R domains are. 11.

(12) high, based on a sample of 348 respondents (Rolland & De Fruyt, 2009), as stipulated in Table 2.. TABLE 2 Correlations between PfPI and NEO P-IRa Factor. r. Emotional stability. .81. Extraversion. .85. Openness. .82. Agreeableness. .88. Conscientiousness. .91. a. Rolland and De Fruyt (2009). In sum, personality traits, defined as “a disposition to behave expressing itself in consistent patterns of functioning across a range of situations” (Pervin, 1994, p. 108), are relevant in order to understand a person’s normal functioning. Personality traits are relatively stable in time and are more dependent on a person’s genes rather than on environmental factors. These personality traits can be validly and reliably psychometrically measured through questionnaires based on the five-factor model of personality which has been validated for several decades. The PfPI can be considered most suitable for measuring personality traits in a work-related context.. II.3.. Personality Traits and Job Effects. Much research has been done on the Big Five personality traits and their role in predicting work-related criteria. For instance, personality is found to be related to job performance (e.g. Barrick, Mount, & Judge, 2001), job satisfaction (e.g. Judge, Heller, & Mount, 2002), citizenship behaviour (e.g. Chiaburu, Oh, Berry, Li, & Gardner, 2011; Organ & Ryan, 1995), deviant work behaviour (e.g. Marcus, Lee, & Ashton, 2007; Salgado, 2002), and leader effectiveness (e.g. Bono & Judge, 2004). Some researchers, e.g. Morgeson et al. (2007), state that personality traits cannot be adequately measured through self-reports in the context of an organisation. More specifically, their criticism pinpoints towards the role of personality tests in the context of personnel selection. Reasons for their criticism include the ones mentioned earlier as disadvantages of self-reporting, primarily the potential of socially desirable responding. Others, like Ones, Dilchert, Viswesvaran and Judge (2007), argue that there could. 12.

(13) indeed be distortion in the context of getting employed but that these distortions are neglectable and can be mitigated by triangulation. Also Wille, De Fruyt and De Clercq (2013) found evidence that the five-factor model is a valid tool to predict work-related outcomes.. In sum, personality traits can predict work-related outcomes. Measurement of these traits in the work-related context may intensify the measurement disadvantages discussed in the section II.2. on personality traits and traits measurement. These disadvantages should therefore be mitigated in studies on personality traits of internal auditors.. II.4.. Personality Traits and Auditors. Research on whether there are desirable personality traits for internal auditors is considered to be especially meaningful given the strong individual auditors effect on the audit quality found recently by Gul, Donghui and Zhifeng (2013). It must be noted however that research also demonstrates that the impact of individual characteristics are mitigated by audit-firm or internal audit department quality-control mechanisms (Jeppesen, 2007) which therefore tempers the potential effect of internal auditors’ personality traits. However, as Malone & Roberts (1996) point out, reduced audit quality behaviour such as falsely signing off a required audit step or accepting a weak client explanation as sufficient evidence increases when auditors perceive the strength of these quality-control mechanisms or the penalties regarding transgressing quality controls to be low. And auditors who want to be obedient to a manager demonstrating reduced audit quality behaviour are more willing to sign-off on a higher questionable asset account (Lord & Todd DeZoort, 2001). It would therefore make sense to mitigate the risk of quality-control failure by hiring internal auditors who are less tempted to demonstrate reduced audit quality behaviour. As a general remark, a survey conducted among internal auditors and the general population demonstrated that the average internal auditor is not more or less honest than the general population (Cherrington & Cherrington, 1993).. II.4.1. Auditor values and virtues We will begin by discussing literature on the effects of auditor values and virtues as a starting point in understanding the potential effects of auditors’ personality. We do so, as research has shown strong significant relationships between values, virtues and personality as measured by the NEO PI-R discussed earlier (e.g. Cawley III, Martin, & Johnson, 2000).. 13.

(14) In Libby and Thorne’s (2007) effort to develop a measure for auditor virtue they found four specific auditors’ virtues which are considered to be most important by public accountants and accountants in-business: integrity, truthfulness, independence and objectivity. Both Shafer, Morris and Ketchand (2001) and Wilson, Pinac-Ward and Ward (1998) have assessed the value preferences of auditors by applying Rokeach’s (1973) value survey. They found similar results with the top four instrumental value preferences –preferable modes of behaviour– being honest, responsible, capable and independent, and the lowest ranked instrumental values being imaginative and obedient. These instrumental value preferences are in-line with one would initially expect from auditors. The top four terminal value preferences –goals that a person would like to achieve during his or her lifetime– were in both studies family security, freedom, self-respect and happiness, and the lowest ranked terminal values being social recognition and a world of beauty. Shafer et al. (2001) extended the Wilson et al. (1998) study by assessing whether certain value preferences lead to increased ethical decision making. They however did not find a relationship between auditor’s value preferences and ethical decision making potentially due to low standard deviations in value ratings in their study. Another explanation for the lack of a statistical relationship could be that other contextual variable override personality traits such as values, which is in line with the internal audit department quality-control mechanisms limitation which we mentioned earlier. Shafer et al. (2001) therefore call for additional research to clarify the role and significance of values.. Besides internal audit department quality-control, the moral philosophy of an internal other could also provide an answer to the role of contextual influencers. Ponemon & Gabhart (1994) find that high levels of moral reasoning by auditors lead to higher desired behaviour such as compliance with independence rules and detecting fraudulent statements. Kung and Huang’s (2013) recent findings suggest that the moral philosophy of auditor affect the attitude of auditor’s towards their auditee. Using Forsyth’s (1980) two-dimensional view of moral philosophy, i.e. idealism versus relativism, they found a mediating effect of moral philosophy towards auditors condemnation of client unethical behaviour. They found that auditors scoring high idealism were much more inclined to condemn client illegal or dubious behaviour as opposed to auditors scoring high on relativism. Furthermore, they found that auditor’s with personal values tending to conservatism were more inclined to be an idealist while auditor’s with personal values tending to self-enhancement were more inclined to be an relativist. In conclusion, auditors with conservative personal values were more critical towards unethical behaviour via the moral philosophy of idealism.. 14.

(15) II.4.2. Auditor traits Personality traits and auditors did first appear in literature in 1972. Trump et al. (1972) described the exemplar auditor as one who is “enterprising, alert, ambitious, value work, independent, self-reliant, planful, responsible, thorough, resourceful, alert to ethical and moral issues, industrious, conscientious. practical, deliberate, dependable, moderate, tolerant, verbally fluent, perceptive, persevering” (Trump, et al., 1972, p. 87). The IIA’s president Richard Chambers more recently described the top audit executive as one who is a superior business acumen, has dynamic communication skills, unflinching integrity and ethics, breadth of experience, excellent grasp of business risks, gift for developing talent and unwavering courage (Chambers, 2011). A recent IIA study focuses on the core competencies and skills needed in an internal auditor and highlights communication skills, problem solving skills, influencing skills and being objective and able to judge (Bailey, 2010). And again also more towards personality instead of skill, M.W. Nelson (2009) points toward three important auditor traits: problem solving ability, scepticism and ethics/moral reasoning. The third has been discussed above, we will now look at how the first two as potential desirable traits that should be possessed by internal auditors.. Problem solving ability is found to be an important trait for auditors as it helps in identifying flaws (Bierstaker & Wright, 2001). It is important for an auditor to see interlinkages between processes and to analyse whether the combination of certain risks within an organisation’s appetite would lead to risks far beyond the level of risk an organisation is willing to take. Also scepticism is found to be an important trait. Hurtt (2010) recently developed a scale to measure auditor scepticism and makes a distinction between the following six characteristics: suspension. of judgment,. questioning mind, search. for knowledge, interpersonal. understanding, self-confidence, and self-determination. Fullerton and Durtschi (2004) have applied this scepticism scale among internal auditors and found that internal auditor’s scoring high on Hurtt’s scepticism scale would be significantly more likely to extend information search when fraud symptoms present themselves. Research has also focussed on the level of locus of control in relation to auditors’ behaviour. For instance Tsui and Gul (1996) have shown that auditors with an internal locus of control, i.e. auditors believing that they control the events affecting them, are significantly less susceptible for going along with a client in the case of an auditor-client conflict situation. Furthermore, Donnelly, Quirin and O'Bryan (2003) demonstrate that auditors with an internal. 15.

(16) locus of control are more accepting of reduced audit quality behaviour such as gathering insufficient evidence and altering audit procedures. These results suggest that an internal locus of control is desirable for internal auditors.. II.4.3. Auditor gender, experience and culture Gender has been found to be related to personality, with females scoring lower on emotional stability and higher on extraversion (Rubinstein & Strul, 2007) and higher on agreeableness and lower on openness (Costa Jr, Terracciano, & McCrae, 2001). Such studies were also performed on accounting managers which showed higher scores for females on traits such as self-control, logical and imaginative (Eaton & Giacomino, 2001). Gender has also been associated with different value sets among accounting students (Akers & Giacomino, 1998).. Auditor experience levels are a common variable in audit research. We found studies distinguishing auditors based on experience in studies on e.g. behaviour (Tsui & Gul, 1996), self-perceived abilities (Owhoso & Weickgenannt, 2009) and judgment making (Choo & Trotman, 1991). This gives reason to believe that level of experience might also relate to personality traits as will be researched in this study.. Consistent with the earlier discussion on the nurture or nature of trait development, McCrae (2000) found that culture does not affect personality as it is primarily biologically based. In a large study on big five personality traits among 55 different countries, Schmitt, Realo, Voracek and Allik (2008) found similar personality traits and differences between men and women across cultures. However, they found lower levels of differences between men and women between developed and developing countries.. In sum, several personality traits have been found desirable for auditors. Some authors focused on the values and virtues of auditors. Values and virtues such as integrity, honesty, truthfulness, responsibility, independence, capability and objectivity are the highest ranking according to several studies. Also the ability for problem solving, scepticism, ethical / moral reasoning and an internal locus of control have been found to be desirable characteristics of auditors. We furthermore find that primarily gender and to a much lesser extent culture relate to the personality of auditors.. 16.

(17) II.5.. Personality Traits and Adjacent Professions. Little research on the effects of personality traits in adjacent professions has been performed. We did however find a relevant meta-analytic study by Barrick et al. (2001). They relate the big five traits with job performance, measured by supervisory ratings and productivity data, in the occupational groups of sales staff, managers, professionals, police and skilled or semiskilled labour. We choose the “professionals” and “skilled or semi-skilled labour” groups as reference groups for the internal auditing community. Barrick et al. (2001) found the trait conscientiousness to be significantly predicting job performance on these groups. In addition, Hurtz and Donovan (2000) found the trait emotional stability to be significantly predicting job performance in the “skilled or semi-skilled labour” group.. In sum, we found little theoretical basis from adjacent professions for personality traits that may be desirable within the internal auditing profession. There are indications however that the traits of conscientiousness and emotional stability play an important role.. II.6.. Conclusion. Personality traits are relevant in order to understand a person’s normal functioning and can predict work-related outcomes. We found strong evidence that these personality traits can be validly and reliably psychometrically measured through questionnaires. Although little research on internal auditor personality traits was performed, our literature study shows several personality traits and values which have been found desirable. These include integrity, honesty, truthfulness, ability for problem solving and scepticism. Searching for desirable personality traits in adjacent professions give reason to believe that conscientiousness and emotional stability are relevant factors. We found that primarily gender and to a much lesser extent culture relate to the personality of auditors. Whether experience level is relevant in this line of audit research as it is in other audit research will be assessed in this study. This provides answer to our research questions “what are personality traits and how are they measured psychometrically?” and “are there indications for desirable personality traits for internal auditors?”.. 17.

(18) III.. METHODS PILOT STUDY. AMONG. INTERNAL AUDITORS. III.1. Introduction This study took place within the context of the internal audit profession in order to assess our research questions “are there certain personality traits that distinguish internal auditors from other highly educated individuals” and “do personality traits differ between starting and experienced internal auditors”.. III.2. Sample and Procedure Former students of the Executive Internal Audit Programme (EIAP) at the Business School of the University of Amsterdam and internal auditors within the author’s professional network were asked to participate in this study. These 414 internal auditors were asked by e-mails from the author and EIAP programme director to participate, refer to Appendix I. Two reminders were sent. 28.5%, or 118 internal auditors, participated. After the questionnaires were collected, we screened the data for missing entries and removed five cases due to a large number of unanswered questions.. III.2.1. Sample of internal auditors versus norm group The final pilot study sample consists of 113 respondents. All respondents were Dutch and their ages ranged from 27 – 76 years (x = 43.2, σ = 10.59). 25% of the respondents were female, which is a bit lower than the 30% in the full 414 internal auditors sample. Working experience ranged from 1 – 0 years (x = 18.1 σ = 11.39).. III.2.2. Sample of staring versus experienced internal auditors We formed two groups of internal auditors in order to assess whether these personality traits differ between starting and experienced internal auditors, which is common to do in audit research as we discussed in our literature review. In line with earlier studies (e.g. Choo & Trotman, 1991; Owhoso & Weickgenannt, 2009; Tsui & Gul, 1996), we classified internal auditors with less than two years of internal auditing experience as starting auditors and internal auditors with more than eight years of internal auditing experience as experienced auditors. Nine internal auditors were excluded from the 113 final pilot study sample as they. 18.

(19) had between two and eight years of internal auditing experience and therefore were not part of either the starting or experienced group. This leads to a sample of 104 internal auditors in the pilot study among starting and experienced auditors.. The starting internal auditors pilot study sample consists of 31 respondents. All respondents were Dutch and their ages ranged from 27 – 61 years (x = 36.1, σ = 9.66). 35% of the respondents were female, which is higher than the 30% in the full 414 internal auditors sample. Working experience ranged from 1 – 37 years (x = 9.5, σ = 8.47).. The experienced internal auditors pilot study sample consists of 73 respondents. All respondents were Dutch and their ages ranged from 31 –. years (x = 46.7, σ = 9.31). 18% of. the respondents were female, which is lower than the 30% in the full 414 internal auditors sample. Working experience ranged from 8 – 0 years (x = 22.4, σ = 10.61).. III.3. Measures We used the Personality for Professionals Inventory (PfPI) questionnaire (Rolland & De Fruyt, 2009) to measure the personality traits within our sample. As shown in section II.2. on personality traits and traits measurement, this questionnaire was preferable to other surveys available even though self-reports are prone to social desirability and other biases. In order to minimise these biases, respondents were assured by complete anonymity and confidentiality. They were furthermore instructed that there were no wrong or right answers to any of the statements and that they were expected to answer truthfully. This is in line with recommendations from other self-report studies (McDonald, 2008). Potential issues with noncontext-specific items were mitigated through the use of a work-related questionnaire. Multiple studies (e.g. Mlinarić & Podlesek, 2013; Schmit, et al., 1995) showed that measurement scales with context-related items have a higher predictive value.. The PfPI includes 183 items to measure 21 personality dimensions and five-factor model proxy scores (i.e. emotional stability, extraversion, openness, agreeableness and conscientiousness). A summary of the definitions used by De Fruyt and Rolland (2013) for the 21 personality dimensions and the five-factor traits is provided in the following paragraphs. Refer to Appendix II for more details.. 19.

(20) III.3.1. Emotional stability Emotional stability relates to whether individuals are calm and confident about the outcome of an event. It was measured as a combination of the subscales sensitivity, self-confidence, susceptibility to stress and frustration tolerance. 1 Sensitivity relates to the worrisomeness of individuals. 2 Self-confidence relates to the confidence of individuals. 3 Susceptibility to stress relates to the level of stress an individual can bear. 4 Frustration tolerance relates to an individual’s sensitivity towards various forms of negative judgment and interference.. III.3.2. Extraversion Extraversion relates to whether individuals move easily among others without standing out or explicitly stepping into the foreground. It was measured as a combination of the subscales enthusiasm, sociability, energy and assertiveness. 5 Enthusiasm relates to an individual’s level of cheerfulness. 6 Sociability relates to whether an individual likes being with others. 7 Energy relates to the pace an individual feels comfortable at. 8 Assertiveness relates to the level an individual explicitly steps into the foreground.. III.3.3. Openness Openness relates to whether individuals are creative and love to think outside the box. It was measured as a combination of the subscales innovation-oriented & creativity, intellectual versus action-oriented, self-reflection and openness to change. 9 Innovation-oriented & creativity relates to the level an individual are open to new approaches. 10 Intellectual versus action-oriented relates to the level an individual prefers to think about problems or just wants to get a job done. 11 Self-reflection relates to the level an individual searches for feedback on their functioning. 12 Openness to change relates to the level an individual likes variation.. 20.

(21) III.3.4. Agreeableness Agreeableness relates to whether individuals easily strike a balance between cooperation and competition with others. It was measured as a combination of the subscales competitiveness, being other-oriented, trusting others and willingness to accommodate. 13 Competitiveness relates to the level an individual feels the need to win. 14 Being other-oriented relates to the level an individual wants to understand the opinion of others. 15 Trusting others relates to the level an individual trust the people they work with. 16 Willingness to accommodate relates to the level an individual wants to avoid confrontations.. III.3.5. Conscientiousness Conscientiousness relates to whether individuals usually work very methodically and systematically and are ambitious and orderly. It was measured as a combination of the subscales systematic and organised approach, self-discipline and motivation to perform. Selfcontrol and pro-activeness were excluded in measuring conscientiousness in line with recommendations of Rolland and De Fruyt (2009). 17 Systematic and organised approach relates to the level an individual is organised. 18 Self-discipline relates to the level an individual is in-control of tasks. 19 Self-control relates to the level an individual is in-control of feelings. 20 Motivation to perform relates to the level an individual wants to excel. 21 Proactiveness relates to the level an individual think ahead to address potential problems.. The PfPI instrument used in this study has been used in previous studies. All measures were tested for internal consistency by assessing Cronbach’s α (Cronbach, 1951) for respective scale items. We considered α’s > .80 to be satisfactory, in line with recommendations of Lance, Butts and Michels (2006) on the interpretation of Nunnally’s (1978) cut-off points. Scale scores were created for all measures by first averaging the responses of the associated items and then normalising the scores on a scale from 0 to 10 based on a table provided by the Pearson Assessment and Information Institute with norm scores for a large set of Dutch individuals with high education (N = 311). Refer to Table 3 for the mean, standard deviation, correlation and Cronbach’s α for all measures. All scale items were measured on a five-point. 21.

(22) Likert-type response scale ranging from “absolutely not characteristic” (1) to “absolutely characteristic” (5). Participants’ gender, age and experience level were included as control variables to rule out potential alternatives for our results. We will provide rationale for the inclusion of these variables, in line with recommendations from Becker’s (2005) study on the potential problems resulting from the inclusion of control variables. Gender and age were included as a control variable since prior research has found both to be related to personality traits (Rubinstein & Strul, 2007; Soto, John, Gosling, & Potter, 2011) which can potentially influence the current measurement of traits. Experience was included as a dummy variable as prior auditing research showed audit tenure effects (e.g. Choo & Trotman, 1991; Owhoso & Weickgenannt, 2009). Internal auditors with less than two years of internal auditing experience were marked “0” and internal auditors with more than eight years of internal auditing experience were marked “1”, all others were excluded.. 22.

(23) TABLE 3 Means, Standard Deviations, and Correlations among Study Variablesa. 23. 1 Sensitivity 2 Self-confidence 3 Susceptibility to stress 4 Frustration tolerance 5 Enthusiasm 6 Sociability 7 Energy 8 Assertiveness 9 Innovation-oriented 10 Intellectual vs. Action 11 Self-reflection 12 Openness to change 13 Competitiveness 14 Being other-oriented 15 Trusting others 16 Accommodate 17 Systematic approach 18 Self-discipline 19 Self-control 20 Motivation to perform 21 Pro-activeness. Mean. s.d.. 4.00 6.03 3.88 5.88 4.84 5.40 5.71 5.42 5.88 5.80 5.47 6.13 4.94 5.65 4.91 4.25 5.93 6.18 6.27 5.35 5.96. 2.26 2.04 2.52 2.06 2.37 2.06 2.20 2.06 2.09 2.07 2.13 2.27 2.22 2.10 2.16 1.93 2.17 2.29 2.40 2.06 1.96. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. S. E. O. A. C. i. ii. iii. (.85) -.63 (.68) .69 -.60 (.84) -.71 .52 -.59 (.86) -.13 .30 -.07 .11 (.78) -.28 .47 -.22 .33 .61 (.81) -.26 .43 -.37 .10 .38 .29 (.77) -.25 .59 -.30 .22 .42 .50 .47 (.76) -.15 .35 -.25 .21 .19 .29 .30 .51 (.70) -.07 .06 -.11 .07 -.08 -.10 -.13 .17 .39 (.76) -.04 .19 -.16 .06 .21 .13 .21 .34 .28 .30 (.69) -.30 .37 -.37 .19 .15 .35 .41 .40 .52 .10 .23 (.73) .07 .27 -.08 -.02 .14 .10 .34 .49 .37 .11 .35 .19 (.80) -.08 .14 -.07 .05 .35 .18 .10 .05 .01 .02 .11 -.05 -.14 (.69) -.29 .37 -.21 .13 .26 .29 .23 .17 .14 .04 -.01 .25 -.17 .35 (.79) .26 -.50 .39 -.35 -.22 -.24 -.25 -.54 -.31 -.12 -.37 -.30 -.40 .00 -.01 (.80) -.09 .17 -.08 -.08 .04 -.07 .24 .14 -.12 -.06 .11 -.03 .11 .16 .06 .01 (.77) -.29 .35 -.27 .29 .11 .04 .30 .07 .01 -.08 .06 .06 .00 .20 .22 -.04 .63 (.82) -.47 .31 -.43 .44 -.13 -.05 .07 .09 -.03 .18 .01 .01 -.08 .19 .21 -.06 .37 .45 (.72) -.09 .37 -.29 .12 .20 .11 .49 .46 .36 .12 .35 .24 .61 .05 -.09 -.39 .30 .36 .13 (.77) -.13 .35 -.28 .12 .15 .10 .28 .49 .27 .27 .39 .22 .41 .04 -.06 -.49 .20 .14 .23 .57 (.68) S Emotional stability 6.20 2.21 -.90 .73 -.85 .84 .13 .34 .30 .35 .25 .13 .11 .36 .01 .08 .26 -.39 .02 .32 .51 .22 .24 (.93) E Extraversion 5.56 2.15 -.31 .59 -.33 .26 .77 .78 .69 .76 .40 -.08 .26 .43 .30 .21 .30 -.40 .11 .18 .00 .40 .32 .38 (.89) O Openness 6.20 2.20 -.18 .31 -.30 .18 .16 .23 .26 .50 .75 .66 .59 .68 .37 .02 .11 -.39 -.04 -.01 .08 .37 .39 .29 .35 (.84) A Agreeableness 4.81 1.96 -.03 -.16 .11 -.10 .03 .02 -.11 -.33 -.23 -.07 -.27 -.12 -.74 .44 .58 .60 .10 .15 .16 -.45 -.42 -.07 -.11 -.27 (.84) C Conscientiousness 6.06 2.23 -.21 .38 -.26 .13 .13 .05 .42 .28 .09 -.03 .21 .10 .27 .16 .11 -.17 .81 .83 .40 .68 .38 .23 .29 .11 -.05 (.88) i Gender (dummy) .25 .43 .26 -.26 .19 -.26 .16 -.01 .03 -.13 -.03 -.21 -.04 .09 -.06 .03 -.15 .13 .02 .05 -.25 .02 -.23 -.28 .01 -.03 .04 .01 ii Age 43.19 10.59 -.03 .07 -.09 .08 -.20 -.04 -.06 -.04 .15 .04 -.13 -.17 -.22 .13 .12 -.02 -.08 .04 .12 -.02 -.13 .07 -.11 -.06 .19 .00 -.22 iii Working experience 18.06 11.39 -.12 .17 -.20 .17 -.19 .03 .07 .03 .20 .00 -.11 -.05 -.16 .17 .20 -.08 .00 .14 .21 .07 -.06 .18 -.02 -.01 .18 .12 -.24 .91 iv Experience (dummy) .70 .46 -.21 .36 -.28 .21 .03 .22 .25 .22 .42 .00 .16 .23 .04 .07 .18 -.27 -.02 .15 .09 .18 .05 .28 .23 .25 -.03 .14 -.19 .46 .52 a Internal consistency statistics (Cronbach’s α) are displayed in parentheses on the diagonal. Gender (0 = male, 1 = female). Experience (0 = starting, 1 = experienced; N = 104). N = 113; bold = p ≤ .01; grey fill = related to factor subscale..

(24) IV.. RESULTS PILOT STUDY. AMONG. INTERNAL AUDITORS. IV.1. Descriptive Statistics Table 3 reports descriptive statistics and correlations among all study variables. As expected, the subscales correlated strongly and significantly with respective five-factor scales in expected directions as shown in the light grey cells in Table 3. Self-confidence correlated with practically all variables, most notably with assertiveness and willingness to accommodate which are not part of the same big five factor as self-confidence. Other notable correlations among the study variables outside of their respective factor group (i.e. one of the big five traits) were assertiveness with willingness to accommodate and competitiveness; motivation to perform with competitiveness; and pro-activeness with willingness to accommodate.. The demographic control variables showed some interesting correlations which give reason to believe that female and starting internal auditors score lower on the emotional stability factors. Experienced internal auditors score higher the personality traits innovation-oriented and energy. Furthermore, age and working experience were insignificantly correlated to all of the study variables except with each other and the internal audit experience dummy for obvious reasons.. IV.2. Description of the Norm Group The results of the internal auditors personality traits detailed in this chapter are compared to a large set of Dutch individuals with high education (N = 311). Within this norm group, personality trait scores are normally distributed among the mean (x = 5.0). All scores between 4 and 6 can be interpreted to be on average with this norm group. Scores below 4 or above 6 can be interpreted as deviant from the norm group, as graphically represented in Figure 2.. 24.

(25) FIGURE 2 Normal Distribution of Personality Traits Resultsa. Low scores 27,4% of the norm group. a. Average scores 45.2% of the norm group. High scores 27,4% of the norm group. De Fruyt & Rolland (2013). The norm group consists of Dutch individuals assessed by Pearson Assessment and Information Institute and is evenly distributed among gender and age groups as is depicted in Table 4.. TABLE 4 Description of Norm Groupa Male. Female. Σ. 15-24. 15.1%. 16.4%. 31.5%. 25-44. 18.0%. 19.9%. 37.9%. 45-65. 18.3%. 12.2%. 30.6%. Σ. 51.5%. 48.6%. 100.0%. Age group. a. De Fruyt & Rolland (2013). N = 311.. IV.3. Results of All Internal Auditors in this Study Table 5 provides scores on the 21 personality traits and the related big five traits of all internal auditors in this study. We sorted the table on mean score for easy identification of deviant scores. We compared these means to the described norm group. Please note the large number of significant differences from the norm group.. 25.

(26) TABLE 5 Scores of Internal Auditors compared to Norm Group (High Education) sorted by Mean Score 19 18 12 2 21 17 9 4 10 7 14 11 8 6 20 13 15 5 16 1 3 S E O A C. Self-control Self-discipline Openness to change Self-confidence Pro-activeness Systematic approach Innovation-oriented Frustration tolerance Intellectual vs. action Energy Being other-oriented Self-reflection Assertiveness Sociability Motivation to perform Competitiveness Trusting others Enthusiasm Accommodate Sensitivity Susceptibility to stress Emotional stability Extraversion Openness Agreeableness Conscientiousness. Mean. s.d.. Δ. 6.27 6.18 6.13 6.03 5.96 5.93 5.88 5.88 5.80 5.71 5.65 5.47 5.42 5.40 5.35 4.94 4.91 4.84 4.25 4.00 3.88 6.20 5.56 6.20 4.81 6.06. 2.40 2.29 2.27 2.04 1.96 2.17 2.09 2.06 2.07 2.20 2.10 2.13 2.06 2.06 2.06 2.22 2.16 2.37 1.93 2.26 2.52 2.21 2.15 2.20 1.96 2.23. 1.27*** 1.18*** 1.13*** 1.03*** .96*** .93*** .88*** .88*** .80*** .71** .65*** .47* .42* .40* .35* -.06 -.09 -.16 -.75*** -1.00*** -1.12*** 1.20*** .56** 1.20*** -.19 1.06***. N = 113; * p ≤ .05, ** p ≤ .01, *** p ≤ .001.. These results show that the full group of internal auditors in this study differ significantly from this norm group on 18 out of the 21 assessed personality traits, including higher scores on self-control (Δ = 1.2 , p < .001), self-discipline (Δ = 1.18, p < .001) and openness to change (Δ = 1.13, p < .001), and lower scores on susceptibility to stress (Δ = -1.12, p < .001), sensitivity (Δ = -1.00, p < .001) and willingness to accommodate (Δ = -.75, p < .001).. The full group of internal auditors in this study also scored significantly different from the norm group on 4 out of 5 big five personality factors, most notably on emotional stability (Δ = 1.20, p < .001), openness (Δ = 1.20, p < .001) and conscientiousness (Δ = 1.06, p < .001). This indicates that internal auditors can be generally regarded as calm and confident, creative, and as individuals who usually work very methodically and systematically.. 26.

(27) IV.4. Results of Starting and Experienced Internal Auditors IV.4.1. Personality traits of starting internal auditors Table 6 provides scores on the 21 personality traits and the related big five traits of the starting internal auditors subset in this study. We sorted the table on mean score for easy identification of deviant scores. We again compared the means to the norm group. Please note the low number of significant differences from the norm group.. TABLE 6 Scores of Starting Internal Auditors compared to Norm Group (High Education) sorted by Mean Score 17 19 21 10 18 14 12 4 16 2 11 3 7 20 5 8 13 6 1 9 15 S E O A C. Systematic approach Self-control Pro-activeness Intellectual vs. Action Self-discipline Being other-oriented Openness to change Frustration tolerance Accommodate Self-confidence Self-reflection Susceptibility to stress Energy Motivation to perform Enthusiasm Assertiveness Competitiveness Sociability Sensitivity Innovation-oriented Trusting others Emotional stability Extraversion Openness Agreeableness Conscientiousness. Mean. s.d.. Δ. 6.06 5.97 5.90 5.81 5.71 5.55 5.32 5.23 5.06 5.00 4.97 4.97 4.87 4.84 4.81 4.81 4.77 4.74 4.71 4.55 4.39 5.29 4.87 5.32 4.97 5.65. 2.26 2.75 2.31 2.23 2.75 2.06 2.37 2.28 1.86 2.08 2.15 2.54 2.43 2.13 2.02 2.26 2.17 1.81 2.21 1.98 1.93 2.28 2.23 2.44 1.60 2.48. 1.06* .97 .90* .81 .71 .55 .32 .23 .06 .00 -.03 -.03 -.13 -.16 -.19 -.19 -.23 -.26 -.29 -.45 -.61 .29 -.13 .32 -.03 .65. N = 31; * p ≤ .05, ** p ≤ .01, *** p ≤ .001.. These results show that starting auditors in this study hardly differ from the norm group with significant differences on merely 2 out of 21 personality traits: systematic and organised approach (Δ = 1.0 , p < .05) and pro-activeness (Δ = .90, p < .05).. 27.

(28) Our results indicate that starting internal auditors: . Are highly systematic and organised in their approach (x = .1, σ = 2.2 ), which makes them reliable and predictable for their own environment. It also indicates that they are usually well prepared and adhere strictly to schedules and deadlines;. . Have a high level of self-control (x = .0, σ = 2. 5), which indicate that they can easily control themselves and their impulses and are able to focus well. It indicates that starting internal auditors generally think carefully about how they will say something or deal with something, and consider all available alternatives;. . Score high on pro-activeness (x = 5.9, σ = 2.31), which indicates that they think a few steps ahead and generally stay ahead of problems;. . Are a bit reluctant to trust others (x = 4.4, σ = 1.93). The score is not far from the normal mean of 5.0 but it might indicate that starting internal auditors are somewhat wary of the people around them and assume that others have a hidden agenda;. . Are not particularly innovation oriented (x = 4. , σ = 1.98), which indicates that starting internal auditors might prefer applying methods they are accustomed to;. . Score just below average on sensitivity (x = 4.7, σ = 2.2 ), indicating that they worry or have negative emotions similar to most individuals.. IV.4.2. Personality traits of experienced internal auditors Table 7 provides scores on the 21 personality traits and the related big five traits of the experienced internal auditors subset in this study. We sorted the table on mean score for easy identification of deviant scores. We again compared the means to the norm group. Please note the large number of significant differences from the norm group.. 28.

(29) TABLE 7 Scores of Experienced Internal Auditors compared to Norm Group (High Education) sorted by Mean Score 2 9 18 12 19 4 21 7 17 14 10 8 6 11 20 15 5 13 16 1 3 S E O A C. Self-confidence Innovation-oriented Self-discipline Openness to change Self-control Frustration tolerance Pro-activeness Energy Systematic approach Being other-oriented Intellectual vs. action Assertiveness Sociability Self-reflection Motivation to perform Trusting others Enthusiasm Competitiveness Accommodate Sensitivity Susceptibility to stress Emotional stability Extraversion Openness Agreeableness Conscientiousness. Mean. s.d.. Δ. 6.53 6.45 6.45 6.44 6.42 6.18 6.10 6.10 5.96 5.85 5.79 5.75 5.73 5.73 5.66 5.22 4.97 4.96 3.90 3.67 3.41 6.62 5.93 6.53 4.84 6.36. 1.72 1.86 2.09 2.06 2.19 1.95 1.80 2.01 2.18 2.07 2.00 1.83 2.07 2.15 2.04 2.23 2.51 2.32 1.95 2.21 2.39 2.01 1.97 2.05 2.11 2.14. 1.53*** 1.45*** 1.45*** 1.44*** 1.42*** 1.18*** 1.10*** 1.10*** .96*** .85*** .79** .75*** .73** .73** .66** .22 -.03 -.04 -1.10*** -1.33*** -1.59*** 1.62*** .93*** 1.53*** -.16 1.36***. N = 3; * p ≤ .05, ** p ≤ .01, *** p ≤ .001.. These results show that experienced internal auditors in this study differ significantly from the norm group on 18 out of the 21 assessed personality traits, most notably on susceptibility to stress (Δ = -1.59, p < .001), self-confidence (Δ = 1.53, p < .001) and innovation-oriented (Δ = 1.45, p < .001).. Our results indicate that experienced internal auditors: . Are very confident about themselves (x = .5, σ = 1. 2), indicating that experienced internal auditors usually trust their own decisions and approach;. . Are creative and innovation-oriented (x = .5, σ = 1.8 ), indicating that they are open for taking new approaches. It is interesting to note that starting internal auditors scored just below average on this personality trait;. 29.

(30) . Have a high level of self-discipline (x = .5, σ = 2.09), indicating that they are good at controlling themselves in order to complete tasks on time and persist even when difficulties arise;. . Are not very susceptible to stress (x = 3.4, σ = 2.39), indicating that they usually know how to deal with stressful work situations and are usually quite good at handling whatever comes up;. . Are not very sensitive to negative emotions (x = 3. , σ = 2.21), indicating that they are better able to place problems into perspective;. . Score low on the willingness to accommodate (x = 3.9, σ = 1.95), indicating that they do not avoid getting into confrontations but also prefer playing more of a mediating role.. IV.4.3. Results of Different Means between Starting and Experienced Auditors We then assessed the significance of the mean difference between starting and experienced auditors to assess whether the personality traits differ related to level of experience. Please again note the large number of significant differences, as depicted in Table 8.. TABLE 8 Differences between Starting and Experienced Internal Auditors Δ 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21. Sensitivity Self-confidence Susceptibility to stress Frustration tolerance Enthusiasm Sociability Energy Assertiveness Innovation-oriented Intellectual vs. Action Self-reflection Openness to change Competitiveness Being other-oriented Trusting others Accommodate Systematic approach Self-discipline Self-control Motivation to perform Pro-activeness. 30. -1.04* 1.53*** -1.56** .95* .17 .98* 1.22** .95* 1.90*** -.01 .76 1.12* .18 .30 .83 -1.16** -.11 .74 .46 .82 .19.

(31) S E O A C. Emotional stability Extraversion Openness Agreeableness Conscientiousness. 1.33** 1.06* 1.21* -.13 .71. N = 104; * p ≤ .05, ** p ≤ .01, *** p ≤ .001.. These results indicate that the personality traits among starting and experienced internal auditors differ significantly on 10 out of 21 personality traits, most notably the personality traits innovation-oriented (Δ = 1.90, p < .001), susceptibility to stress (Δ = -1.56, p < .01) and self-confidence (Δ = 1.53, p < .001). Starting and experienced internal auditors also differ on the aggregated big five personality factor scales. These differences are significant for emotional stability (Δ = 1.33, p < .01), openness (Δ = 1.21, p < .05) and extraversion (Δ = 1.06, p < .05). These findings indicate that more experienced internal auditors are more creative and open for new approaches, face less stress and have more trust in their own decisions and approach and have a lot of energy and keep a fast pace.. IV.5. Conclusion The results show that personality traits of internal auditors in this study indeed differ significantly from the large norm group of individuals with a high education on 18 out of 21 assessed personality traits. This holds especially for the personality traits of experienced internal auditors. Personality traits of starting and experienced internal auditors differ significantly on 10 out of 21 assessed personality traits. Experienced internal auditors score higher on the big five factors emotional stability, openness and extraversion compared to starting internal auditors. This provides answer to our research questions “are there certain personality traits that distinguish internal auditors from other highly educated individuals” and “do personality traits differ between starting and experienced internal auditors”.. 31.

(32) V.. V.1.. METHODS PERSONALITY PROFILE. ACCORDING TO. CAES. Introduction. A number of Chief Audit Executives from internal audit departments of companies within The Netherlands were asked to participate to establish a desired personality profile of an internal auditor. This was done in order to contribute to a baseline to facilitate the interpretation of the pilot study among internal auditors results and to provide additional answers to our research question “are there indications for desirable personality traits for internal auditors?”.. V.2.. Sample and Procedure. Chief Audit Executives (CAEs) of large Dutch internal audit departments were asked to participate in this study. 30 CAEs were asked by e-mails from the author to participate, please refer to Appendix II for this e-mail. Two reminders were sent. 36.7%, or eleven CAEs, participated. After the questionnaires were collected, we screened the data for missing entries and did not need to remove any cases.. The personality profile study sample consists of eleven respondents. All respondents were Dutch and their ages ranged from 41 – 53 years (x = 45.9, σ = 4.90). Zero percent (0%) of the respondents were female which is substantively lower than the 13% in the full 30 CAEs sample. Please note that this number of participants will only provide an impression, albeit relevant, but is too but is too small to make any statistical valid interpretations.. V.3.. Measures. The Chief Audit Executives were asked to rank the 21 personality traits detailed in the previous sections on a ten-point Likert-type response scale. They were provided with a detailed description per personality traits and explained that these traits are normally distributed.. 32.

(33) VI.. RESULTS PERSONALITY PROFILE. ACCORDING TO. CAES. VI.1. Personality Profile according to Chief Audit Executives VI.1.1. Personality profile compared to norm group First, the ranked personality traits were compared to the norm group, as is depicted in Table 9. Refer to section IV.2. for details on the norm group. We again sorted the table by mean scores for easy identification of deviant scores. Please again note that the number of participants is too small to make any statistical valid interpretations. Significance levels of respective delta’s are therefore excluded in tables in this chapter.. TABLE 9 Desirable Personality Profile According to Chief Audit Executives compared to Norm Group (High Education) sorted by Mean Score 21 18 2 17 20 7 4 19 6 11 12 8 14 9 5 15 10 13 1 3 16 S E O A C. Pro-activeness Self-discipline Self-confidence Systematic approach Motivation to perform Energy Frustration tolerance Self-control Sociability Self-reflection Openness to change Assertiveness Being other-oriented Innovation-oriented Enthusiasm Trusting others Intellectual vs. action Competitiveness Sensitivity Susceptibility to stress Accommodate Emotional stability Extraversion Openness Agreeableness Conscientiousness. N = 11.. 33. Mean. s.d.. 8.45 8.36 8.27 8.18 8.09 8.09 8.09 8.09 7.82 7.64 7.55 7.36 7.27 7.18 6.82 5.82 5.82 5.64 4.82 3.64 3.64 6.98 7.52 7.05 5.27 8.21. .52 .67 .79 .98 1.22 .94 1.04 .70 1.40 1.29 1.29 .50 1.19 1.60 1.33 1.72 2.23 2.06 2.18 2.20 1.57 1.23 .68 .81 .94 .64. Δ 3.45 3.36 3.27 3.18 3.09 3.09 3.09 3.09 2.82 2.64 2.55 2.36 2.27 2.18 1.82 .82 .82 .64 -.18 -1.36 -1.36 1.98 2.52 2.05 .27 3.21.

(34) These results indicate that the desirable internal auditor profile according to Chief Audit Executives (CAEs) can be summarised as follows: . CAEs perceive a low score on susceptibility to stress (x = 3. , σ = 2.20) to be optimal;. . Self-discipline (x = 8.4, σ =.67), systematic and organised approach (x = 8.2, σ = .98) and self-control (x = 8.1, σ = . 0) score high on the ladder of desirable personality traits in an internal auditor;. . CAEs find a high score on the personality trait of being other-oriented (x = 7.3, σ = 1.19) and sociability (x = 7.8, σ = 1.40) combined with a low score on willingness to accommodate (x = 3.6, σ = 1.57) important;. . CAEs perceive a high level of self-confidence (x = 8.3, σ = . 9) and frustration tolerance (x = 8.1, σ = 1.04) important in an internal auditor;. . Pro-activeness (x = 8.5, σ = .52) is mentioned as the second most desirable personality trait.. VI.1.2. Personality profile compared to all internal auditors in this study We then compared the mean scores of desirable personality traits according to CAEs to the scores of the internal auditors in this study, to assess whether the expectations of the representatives of the internal audit community align with the current state of this community, as depicted in Table 10.. 34.

(35) TABLE 10 Desirable Personality Profile According to Chief Audit Executives compared to Internal Auditors sorted by Mean Score 21 18 2 17 20 7 4 19 6 11 12 8 14 9 5 15 10 13 1 3 16 S E O A C. Pro-activeness Self-discipline Self-confidence Systematic approach Motivation to perform Energy Frustration tolerance Self-control Sociability Self-reflection Openness to change Assertiveness Being other-oriented Innovation-oriented Enthusiasm Trusting others Intellectual vs. Action Competitiveness Sensitivity Susceptibility to stress Accommodate Emotional stability Extraversion Openness Agreeableness Conscientiousness. Mean. s.d.. 8.45 8.36 8.27 8.18 8.09 8.09 8.09 8.09 7.82 7.64 7.55 7.36 7.27 7.18 6.82 5.82 5.82 5.64 4.82 3.64 3.64 6.98 7.52 7.05 5.27 8.21. .52 .67 .79 .98 1.22 .94 1.04 .70 1.40 1.29 1.29 .50 1.19 1.60 1.33 1.72 2.23 2.06 2.18 2.20 1.57 1.23 .68 .81 .94 .64. Δ 2.50 2.19 2.25 2.25 2.75 2.38 2.21 1.82 2.42 2.17 1.41 1.94 1.63 1.30 1.98 .91 .02 .70 .82 -.25 -.61 .77 1.97 .84 .46 2.15. N = 11.. These results show that the desired personality profile according to CAEs differ from the actual personality profile of internal auditors in this study with CAEs generally expecting higher scores. Refer to the results below for a detailed view for both starting and experienced internal auditors.. 35.

(36) VI.1.3. Personality profile compared to starting and experienced internal auditors To assess whether alignment between CAE expectations and the internal audit community differ between starting and experienced auditors, we compared the means of both groups to the desired personality traits according to CAEs, as depicted in Table 11.. TABLE 11 Desirable Personality Profile According to Chief Audit Executives compared to Starting and Experienced Internal Auditors Response sorted by Mean Score 21 18 2 17 20 7 4 19 6 11 12 8 14 9 5 15 10 13 1 3 16 S E O A C. Pro-activeness Self-discipline Self-confidence Systematic approach Motivation to perform Energy Frustration tolerance Self-control Sociability Self-reflection Openness to change Assertiveness Being other-oriented Innovation-oriented Enthusiasm Trusting others Intellectual vs. action Competitiveness Sensitivity Susceptibility to stress Accommodate Emotional stability Extraversion Openness Agreeableness Conscientiousness. Mean. s.d.. 8.45 8.36 8.27 8.18 8.09 8.09 8.09 8.09 7.82 7.64 7.55 7.36 7.27 7.18 6.82 5.82 5.82 5.64 4.82 3.64 3.64 6.98 7.52 7.05 5.27 8.21. .52 .67 .79 .98 1.22 .94 1.04 .70 1.40 1.29 1.29 .50 1.19 1.60 1.33 1.72 2.23 2.06 2.18 2.20 1.57 1.23 .68 .81 .94 .64. Δ starting 2.55 2.65 3.27 2.12 3.25 3.22 2.87 2.12 3.08 2.67 2.22 2.56 1.72 2.63 2.01 1.43 .01 .86 .11 -1.33 -1.43 1.69 2.65 1.72 .30 2.57. Δ experienced 2.36 1.91 1.74 2.22 2.43 2.00 1.91 1.67 2.09 1.91 1.11 1.61 1.42 .73 1.85 .60 .02 .68 1.15 .23 -.27 .36 1.59 .51 .44 1.86. N = 11; * p ≤ .05, ** p ≤ .01, *** p ≤ .001.. These results show that the difference between the desired personality profile according to CAEs and the actual personality profile of internal auditors is strongest for starting internal auditors, most importantly on self-confidence (Δ = 3.27), motivation to perform (Δ = 3.25) and energy (Δ = 3.22). The gap is smaller for experienced auditors, with the largest differences in CAE expectations and practice being on motivation to perform (Δ = 2.43), pro-. 36.

(37) activeness (Δ = 2.36) and systematic and organised approach (Δ = 2.22). This indicates that there is a considerable gap between the desired personality traits according to CAEs and the personality traits of starting and experienced internal auditors.. VI.2. Conclusion The results indicate that there are differences between the desired personality profile according to CAEs and the current internal audit population. High scores on pro-activeness and self-discipline and low scores on willingness to accommodate and susceptibility to stress are considered desirable according to eleven inquired CAEs. The results indicate that starting internal auditors differ more from the desired personality profile compared to experienced internal auditors. This provides additional answer to our research question “are there indications for desirable personality traits for internal auditors?” besides answers drawn from the literature review.. 37.

(38) VII. DISCUSSION. VII.1. Introduction The purpose of this study was to explore whether there are desirable personality traits for internal auditors and whether these personality traits can be measured psychometrically, and to answer the following research questions: 1 What are personality traits and how are they measured? 2 Are there certain personality traits that distinguish internal auditors from others? 3 Do personality traits differ between starting and experienced internal auditors? 4 Are there indications for desirable personality traits for internal auditors?. The study has important implications for the internal audit community, management practice and academia as it provides insight in the personality traits of internal auditors today and on how they differ from other highly educated individuals, among each other based on experience levels and from Chief Audit Executives (CAEs) expectations. After discussing these findings we will discuss the following most important practical implications for the internal audit community: . Assessment of personality traits should become a rooted element in the recruitment of internal auditors and should affect the staffing decisions of internal audit teams.. . Different types of internal auditor may be needed in the higher ranks of an internal audit department.. . Mismatches between expectations of CAEs and the current internal audit community lead to specific risk for which we propose mitigating actions.. . Specific personality traits may prevent reduced audit quality behaviour and therefore lead to higher quality.. VII.2. Personality Traits of Internal Auditors Personality traits in the work-related context can be measured psychometrically with the PfPI. We have seen that the internal auditors in this study generally score high on traits such as selfcontrol and self-discipline and low on susceptibility to stress and sensitivity. The average personality profile of the internal auditors can generally be described as individuals who...  can handle stressful situations and are confident about the outcome of events;. 38.

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