Page 35 - IAT_April_2025_Magazine

In some cultures, giving gifts or paying bribes is Conversely, in more egalitarian cultures, such as
seen as a normal part of doing business, while in
others, it is viewed as an unacceptable violation of
ethical standards. For instance, in many parts of the
world, particularly in some developing countries,
gift-giving is a common practice and may even
be seen as a sign of respect or a way to facilitate
business negotiations. However, in countries with
strict anti-corruption laws, such practices are
considered bribery and are illegal. For example, it
is normal to give cash envelopes as cultural gifts to
customers on key festivals, marriages in countries
like China, Japan, Indonesia, etc. However, for most
multinational companies such practices are against
global policies. Few industries (ex. Healthcare) are
more restrictive as they are more regulated and
governed by industry codes.
For auditors working in these environments, the
ethical dilemma is clear: how can they maintain
objectivity and integrity when local customs may
require actions that conflict with international anti-
corruption standards? A multinational auditor may
face pressure to overlook such practices, but doing
so could violate both legal regulations and ethical
obligations.
2. Respect for Hierarchical Structures and
lack of Speak-up Culture
In many cultures, respect for authority and
hierarchy is deeply ingrained. For example, in
countries like Japan and many parts of Asia, business
practices often prioritize the decisions made by top
executives. In such environments, auditors may
feel hesitant to question or challenge the decisions
of senior managers, even if they suspect unethical
behaviour. This can lead to a conflict between an
auditor’s duty to remain independent and the
cultural pressure to respect authority.
INTERNAL AUDIT TODAY
those in Scandinavia or parts of the U.S., there
may be a stronger expectation for individuals at all
levels to voice concerns and question authority if
necessary. Auditors in these cultures may feel more
empowered to speak up about potential ethical
violations, whereas their counterparts in more
hierarchical societies might face greater challenges
in doing so.
3. Approaches to Transparency and
Disclosure
In certain cultures, openness and transparency
are fundamental ethical values, while in others,
maintaining privacy and discretion are prioritized.
For instance, Western cultures, particularly in the
U.S. and Europe, often emphasize transparency
in financial reporting and accountability, with
strict regulations requiring full disclosure. In
contrast, some cultures may prioritize maintaining
confidentiality and protecting personal or corporate
information, which can hinder transparency.
Auditors working in multinational settings must
navigate this difference by balancing the need
for full disclosure with the understanding that in
some cultures, withholding certain information
may be seen as ethical or necessary for protecting
relationships or business interests.
4. Time Orientation and Ethical Flexibility
Different cultural attitudes towards time can also
influence ethical decision-making. In cultures that
value long-term relationships and commitment,
such as in many Asian countries, auditors may
encounter situations where decisions are based on
long-standing business ties, even if those decisions
involve compromises in ethical standards. On the
other hand, cultures that are more focused on short-
term results, such as in some Western countries,
may pressure auditors to make quicker, more
financially driven decisions that could overlook
long-term ethical concerns.
This difference in time orientation can create tension
for auditors, as they may have to choose between
respecting cultural expectations for relationship-
building and adhering to global auditing standards
that prioritize objectivity and transparency.
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