of conduct. If adhered to, then an ethical policy can help to enhance ethical behavior
among employees and, accordingly, reduce the likelihood of fraud being committed.
Although support was found for H5, this factor is worthy of particular attention. Merely
providing written ethical policy statements is insufficient to ensure high-quality ethical
standards with an organization. Top management needs to establish a consistent ethical
environment and instill moral values in employees by example, that is, they must be role
models for their employees.
An interesting finding in this Hong Kong study, and one that is in conflict with the
findings of previous studies (such as those of Moyes andHasan’s (1996)US study), is that
auditors’ prior success in fraud detection has no significant association with the
non-occurrence of fraud within an organization. Given that the business risk and control
environment of every organization is unique, it is possible that this factor is responsible
for the non-significant result found, although further research is required to explore the
issue in full. Likewise, auditor type had no significant bearing on the likelihood of fraud
in the current study, in contrast to the evidence presented by Francis and Yu (2009).
As the audit market and environment in which auditing firms operate are competitive,
and Hong Kong is no exception, non-Big4 firms strive for excellence in their service
provision to compete with their Big4 counterparts. It is thus possible that the former are
even more risk averse than the latter and thus provide tailor-made services to meet their
clients’ requirements. Further research is needed to investigate this issue and find
explanations for the non-significant result reported here.