A Hierarchical Model of Auditors' Dysfunctional Behavior: A Cross-Country Empirical Analysis of the UK and Kuwait

Various risks introduced after the many accounting scandals of Enron, WorldCom, Tyco International, Parmalat, and others played a major role in transforming the markets from the information age into the knowledge age (Howieson, 2003). The decision process is becoming more complicated where information should be both complete and assured. The completeness and assurance of information are vital characteristics that reflect reliability and validity. Completeness is ensured through applied accounting standards and regulations, while information assurance is confirmed through applied auditing standards. (AccountAbility, 2003, p. 18). The study attempts in shedding the light on factor leading to unethical acts exercised by external auditors leading to reduction of audit quality. Data will be collected from two different countries (Kuwait and UK) to assess any cultural effect on auditors' dysfunctional behaviour. Several reasons explain why Kuwait a developing country is chosen in this study and compared to the UK a developed one. First, Kuwait preceded other countries, such as the United Arab Emirates and Saudi Arabia, in the adoption of the IFRS (Al-Shammari et al., 2008). Second, KSE signed a contract of coordination with the Swedish OMXNASDAQ which is one of the most prominent stock exchange markets. Third, Kuwait set the target of becoming an international financial centre meeting the worlds economic growth requirements while leading the provision of financial services in the Middle East. In the UK, the Big Four companies dominate as they audit all the FTSE 100 companies (Financial Times Stock Exchange 100 Index companies in the UK) and the majority of the remaining listed companies (Beattie et al., 2003). It is expected that auditors working in the UK and Kuwait share many similar working conditions such as the stress, the methods, the auditing and accounting principles, the code of ethics and the supervision by the government and the general public. Although these two countries work under many common circumstances, cultural differences, which are tackled under Hofstedes cultural dimensions theory, show the extent to which audit in a developed European country differs from audit in a developing Middle Eastern country. In addition to the potential cultural differences, the level of experience auditors possess might also affect the extent of committing dysfunctional auditors behaviour