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A Quantitative Approach of Professional Skepticism and Fraud

Detection among Malaysian Internal Auditors

Nik Nadia Azhar., Sharifah Nazatul Faiza Syed Mustapha Nazri., Salwa Zolkaflil., Ambar

Kusumaningsih

Universiti Teknologi Mara, Malaysia

DOI: https://doi.org/10.51244/IJRSI.2025.120800107

Received: 07 Aug 2025; Accepted: 13 Aug 2025; Published: 11 September 2025

ABSTRACT

Purpose: This study examines how professional skepticism traits influence internal auditors’ fraud detection.

Design/methodology/approach The participants in the study were internal auditors employed in Malaysia.

Survey questionnaires including six characteristics of professional skepticism based on Hurtt's (2010)

paradigm were disseminated. The traits are classified into three categories: evaluation of evidence (inquisitive

mindset, suspension of judgement, pursuit of knowledge), comprehension of evidence providers (interpersonal

insight), and auditor initiative to act on evidence (self-assurance and self-determination), serving as the

independent variables. The dependent variable was the identification of fraud by internal auditors. Numerous

studies have examined the correlation between these attributes and fraud detection, predominantly

concentrating on external auditors, with few investigations into internal auditors. A total of 150 replies were

collected and considered valid. Pearson correlation and multiple linear regression were conducted to fulfill the

research goals.

Findings The findings, grounded in attribution theory, indicated substantial positive correlations among

enquiring mindset, pursuit of knowledge, interpersonal comprehension, self-determination, and fraud

detection. Nonetheless, the correlations between the suspension of judgement and self-confidence in respect to

fraud detection, albeit positive, were deemed inconsequential.

Originality/value This study enhances Attribution Theory by associating attributes of professional skepticism

with fraud detection, offering empirical proof of their influence on internal auditors. This expands the theory's

applicability beyond social psychology to organisational behaviour and forensic accounting, enriching our

comprehension of auditors' cognitive and behavioural processes. The findings provide directives for internal

auditors in Malaysia and regulatory authorities, highlighting the cultivation of professional skepticism attribute

to enhance fraud detection. Regulatory entities such as IIA Malaysia ought to contemplate amending standards,

instituting training programs, and fostering awareness to augment auditors' competencies and mitigate fraud

threats.

Keywords: Hurtt’s professional skepticism, fraud detection, internal auditors, questioning mind, attribution

theory

INTRODUCTION

The ongoing prevalence of fraud, corruption, and economic crimes remains a global challenge. In 2022, PwC

executed a global study on economic crime and fraud to assess organisations' viewpoints on these matters. The

results indicate that 46% of organisations encountered fraud or economic crime in recent years, a statistic

comparable to the 47% reported in 2020 (PwC, 2022). It is particularly alarming that more than 50% of

organisations with revenues surpassing US$10 billion encountered fraud, with 18% of these suffering a

significant financial impact of at least $50 million from their most severe fraud occurrences (PwC, 2022). The

Association of Certified Fraud Examiners (ACFE) investigated the causes and consequences of occupational

fraud, uncovering significant findings. The research, entitled ‘Occupational Fraud 2024: Research to the

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Nations’, revealed nearly two thousand cases of fraud across 138 nations. The total financial damage from

these fraud instances surpassed $3.1 billion (ACFE, 2024). This comprehensive global study underscores the

widespread occurrence of occupational fraud and its effects on organisations in various geographical regions.

The findings indicate that increased vigilance, preventive strategies, and effective fraud detection systems are

essential to protect organisations and reduce significant financial losses resulting from fraudulent activity.

Financial fraud endures, echoing earlier schemes such as Ponzi's. Considering economic apprehensions, the

trial of the Futures Exchange (FTX) underscores persistent difficulties, as the founder confronts allegations of

fund misappropriation, affecting investors and instigating a legal conflict. Bernie Madoff engineered the

largest Ponzi scam, with investigations revealing that his organisation embezzled almost USD 19 billion from

40,000 investors (O’Connell & McVearry, 2024). Enron is notable as one of the most consequential corporate

fraud instances of the 21st century, having admitted in November 2001 to inflating profits by about USD 600

million. These instances exemplify enduring issues, illustrating the continuing importance of fraud detection

and prevention (O’Connell & McVearry, 2024).

In the modern context, businesses face a more complex business environment influenced by technology

advances, changing regulatory requirements, rising hazards, and other elements (PwC, 2019). People

increasingly expect the internal audit department to act as a strategic business partner, offering crucial insights

to tackle these challenges. A survey on internal audit concerns performed by PwC in collaboration with IIA

Malaysia indicated that 93% of respondents agreed that stakeholder expectations of internal audit have

significantly increased recently (PwC, 2019). Proficient auditors possessing strategic insight and specialist

company expertise are crucial for delivering astute business suggestions. Almost half of the respondents

identified a lack of skilled staff in their internal audit teams, impeding the provision of high-quality work

(PwC, 2019). Kabuye et al. (2017) demonstrate that internal auditors possessing the necessary knowledge,

abilities, and experience are more capable of assisting management in implementing successful anti-fraud

measures.

Hamshari et al. (2021) assert that a statistically significant association exists between professional skepticism

and the identification of cheating, fraud, and misstatements in financial statements. Consequently, internal

auditors who employ a significant degree of professional skepticism are more likely to identify fraud within

businesses. Gabryela (2017) asserts that, based on a study conducted in Indonesia, members of Badan

Pengawasan Keuangan dan Pembangunan (BPKP) in Central Java had a comprehensive grasp of professional

skepticism in fraud detection. Internal auditors are explicitly required to perform their duties with professional

skepticism, necessitating a thorough investigation and critical evaluation of results while upholding an

impartial assumption about the integrity or deceit of management or staff. This competence is essential, as the

predominant reason for neglecting fraud is linked to insufficient implementation of the principle of

professional skepticism (Djordjevic & Đukić, 2015).

Studies conducted by Amin et al. (2019), Solichin et al. (2021), and Wahidahwati and Asyik (2022) have

examined the relationship between professional skepticism and fraud detection. Nevertheless, this research

exclusively used Hurtt's professional skepticism framework to evaluate overall professional skepticism,

overlooking individual traits in the assessment of fraud detection. Hurtt (2010) categorises skepticism into

many branches to examine how these characteristics influence professional skepticism. Hurtt (2010) identified

six essential characteristics of professional skepticism, dividing them into three broad groups. The initial set of

attributes (an inquisitive mindset, suspension of judgement, and pursuit of information) directly relates to how

auditors examine evidence. A sceptical individual demonstrates a willingness to meticulously evaluate

evidence before making judgements (Fullerton & Durtschi, 2011). They critically evaluate information, defer

conclusions until more investigation, and exhibit a thirst for knowledge, eschewing superficial acceptance of

circumstances in favour of seeking rationale, evidence, and justifications (Fullerton & Durtschi, 2011). The

fourth attribute, interpersonal understanding, emphasises the importance of comprehending the human

elements of auditing while examining evidence (Hurtt, 2010). The argument presented is that a sceptical

individual recognises the heterogeneity in personal perceptions of an event and understands that these

divergent viewpoints may contribute to the dissemination of false, biased, or misleading information (Fullerton

& Durtschi, 2011). The latter two traits (self-confidence and self-determination—emphasize the individual's

ability to act decisively based on acquired information (Hurtt, 2010). These characteristics enable sceptics to

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value their own viewpoints, question the assumptions of others, and demand sufficient information to rectify

any discrepancies or inaccuracies offered by others (Fullerton & Durtschi, 2011).

Few studies have investigated the degree of professional skepticism among internal auditors, as most research

has concentrated on external auditors (Dudy Satyawan et al., 2022; Nazri et al., 2023; Sayed Hussin &

Iskandar, 2015). Although professional skepticism is primarily linked to external auditors, as thoroughly

outlined in the International Standard of Auditing, its relevance transcends the realm of external auditing.

Although prior researchers have extensively examined the correlation between professional skepticism and

fraud detection in regions such as Indonesia (Dudy Satyawan et al., 2022; Gabryela, 2017) and the United

States (Castro, 2013; Ramen et al., 2023), studies are deficient in focusing on Malaysia, especially concerning

the professional skepticism attributes delineated by Hurtt (2010) and their influence on internal auditors' fraud

detection capabilities. This study aims to investigate how professional skepticism's characteristics affect the

ability of internal auditors to identify fraud. The results of this study are expected to provide significant

insights to organisations, propose enhancements to the internal audit function, and offer tactics to improve

fraud detection by strengthening the professional skepticism of internal auditors.

LITERATURE REVIEW AND HYPOTHESES DEVELOPMENT

Attribution Theory

Attribution theory, introduced by Fritz Heider in 1958, is a key psychological framework that aims to explain

how humans make sense of their surroundings by assigning causes to events and behaviours. It has had a

significant influence on social psychology and our understanding of how individuals perceive and interpret

others' behaviour. This theory is essentially based on two key ideas: the distinction between internal and

external attributions and causal attributions (Heider, 1958). The core of Heider's theory is causal attribution. It

refers to the human proclivity to seek explanations for why events occur and people behave the way they do. In

other words, when we see an event or behaviour, our initial reaction is to ask, "Why did this happen?"

According to Heider's theory, this process of causal attribution is essential to human cognition and social

interaction (Heider, 1958). Internal attributions are the assignment of credit for an event or behaviour to a

variable within an individual. Internal attributions assign the reason to something intrinsic in the individual,

such as personality qualities, abilities, or intentions (Heider, 1958). For example, if someone does very well on

a test, we may attribute their achievement to intellect or dedication, both of which are internal characteristics.

External attributions, however, attribute an event's or behaviour's origin to factors other than the person. These

outside variables include environmental or situational elements that are out of a person's control (Heider,

1958). Making external attributions means attributing someone's tardiness to heavy traffic or their scholastic

difficulties to a difficult course. According to Heider's Attribution Theory, depending on the information at

hand and the situation's context, humans frequently switch between internal and external attributions. This

dynamic attribution process aids our ability to make sense of the outside environment, analyse others'

behaviour, and predict future behaviour.

The attribution theory was employed in this study because it sought to analyse the pertinent aspects of internal

auditors’ professional skepticism that affect fraud detection by examining how professional skepticism

attributes, such as questioning mindset, suspension of judgement, search for knowledge, interpersonal

understanding, self-confidence, and self-determination, would enhance the internal auditors’ ability to detect

fraud. Several prior research works, applying the attribution theory to assess factors influencing fraud detection

among auditors, support this study. For example, Chen et al. (2023) applied the attribution theory in their

research, which stated that personality attributes and professional skepticism can be leveraged to improve audit

quality. Additionally, they found that professional skepticism has a considerable impact on fraud detection.

This attribution theory is also used by Wahidahwati and Asyik (2022) to determine what aspects impact the

auditors when doing an engagement, particularly the auditors' personal qualities. The level of professional

skepticism, ethical behaviour, and experience that have an influence on the quality of their work in the

organisations are used to measure the quality of personal auditors in their study. A similar study by Nazri et al.

(2023) also employed attribution theory to investigate the correlation between auditors' professional skeptical

features and fraud detection in Malaysia among non-Big4 auditors.

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Fraud Detection

ISA 240 (UK and Ireland) outlines the main responsibility for fraud prevention and detection for those charged

with governance (TCWG) and management. Emphasising oversight, it stresses the need for robust internal

controls to ensure reliable financial reporting and minimise the risk of material misstatements in financial

statements due to fraud and operational inefficiency.

IIA (2019) emphasised that, although the primary responsibility for preventing and detecting fraud lies with

management and those charged with governance (TCWG), internal auditors play a crucial role in supporting

management’s anti-fraud efforts. Internal auditing, an independent and impartial function within an

organisation, aims to improve operations through a systematic and disciplined approach that assesses and

enhances governance, risk management, and internal control procedures. This approach involves providing

assurance services on the design of internal controls to prevent and detect fraud (IIA Malaysia, 2017). The

internal auditor evaluates fraud risks, conducts audits on controls, assesses the likelihood of fraud, and

examines the organisation's approach to managing fraud risk (IIA, 2019).

Establishing fraud detection methods is done when preventative measures have failed or when the fraud has

happened (Djordjevic & Đukić, 2015). Fraud identification entails actions to assess the likelihood that fraud is

taking place (Albrecht et al., 2018). Detecting fraud necessitates skill, information, and intuitive acuity. This

intuition is a component of both professional skepticism and spiritual intellect. Internal auditors are crucial in

detecting fraud because they possess the necessary knowledge and expertise (Agustina et al., 2021a;

Bayuandika & Mappanyukki, 2021). According to Ar’Reza et al. (2020), internal auditors detect fraud by

using risk-based internal audits. Risk-based internal auditing is a method of prioritising business risks and

important controls that hurt the accomplishment of a company's goals, where they will use the risk profile

developed by the risk management unit in the central company as a tool for conducting audits. Internal

auditors' audits will concentrate on high and extreme risk points to detect red flags or the chance of fraud with

risk-based internal audits (Ar’Reza et al., 2020). Red flags are cues or signs that something is unusual and

needs further examination (Agustina et al., 2021a). Amin et al. (2019) stated that understanding the red flags

could increase the chances of detecting fraud and eventually minimising it within the organisation.

As a member of the organisation, the internal auditor acquires an in-depth understanding of its controls (IIA,

2019) and enjoys unhindered access to its reports and documents (Castro, 2013). This understanding enhances

the effectiveness of fraud investigations and the identification of potential control gaps leading to fraud.

Additionally, the internal auditor, as an organisational employee, is more likely to observe unusual staff

behaviours due to daily interactions within the same workplace (Castro, 2013), increasing the likelihood of

detecting fraud compared to external auditors. Historically, a significant number of frauds have been

uncovered inadvertently (Albrecht et al., 2018). The use of technology to mine various databases in search of

unusual trends, numbers, relationships, or other anomalies that could indicate fraud has become a significant

proactive fraud detection development recently (Albrecht et al., 2018). Internal auditors face unique challenges

in detecting fraud. They are bombarded with stimuli and competing goals. Internal auditors must play both the

advocate and adversary roles, building positive relationships with those who are highly driven, politically

astute, and most prone to commit fraud. The auditors' dual accountability may influence their decisions and

decrease their skepticism (Fullerton & Durtschi, 2011).

The IIA includes fraud knowledge in its competency framework, as it is crucial for internal auditors to be

proficient in detecting, preventing, and addressing fraudulent activities within an organisation (IIA, 2020).

Competence in fraud-related matters ensures that internal auditors can effectively assess and mitigate risks

associated with financial misconduct, safeguarding the integrity of an organisation's operations. This

knowledge empowers auditors to recognise red flags, conduct thorough investigations, and recommend control

measures to prevent fraud, ultimately contributing to improved organisational governance and financial

stability (IIA, 2020).

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Hypothesis Development

Examination of Evidence and Fraud Detection

According to Hurtt (2010), auditors should embody three key traits in the process of evidence assessment, i.e.,

maintaining a questioning attitude, withholding premature judgements, and actively pursuing information. This

embodiment underscores the necessity for internal auditors to refrain from blindly accepting evidence. Instead,

they must rigorously scrutinise it to determine its adequacy and relevance before concluding. Professional

skepticism, as outlined by the ISA, encompasses a mindset of critical inquiry and meticulous examination of

audit evidence. Philosophically, skepticism underscores the value of maintaining a questioning attitude, which

enriches the thoroughness of evidence evaluation in audit scenarios.

Furthermore, a skeptical individual exercises judgement suspension when assessing evidence, adhering to

directives from regulatory bodies overseeing auditors. Confronted with dogmatic assertions, skeptics refrain

from premature conclusions, demonstrating a deliberate approach to opinion formation (Hurtt, 2010). A thirst

for knowledge, unlike a questioning mindset, embodies a broad curiosity that transcends specific facts or

theories (Hurtt, 2010). This trait, identified by Sayed Hussin and Iskandar (2015) and echoed by Hurtt (2010),

characterises skepticism. Auditors equipped with extensive expertise demonstrate heightened skepticism,

contributing to fraud detection efforts (Dudy Satyawan et al., 2022; Sayed Hussin & Iskandar, 2015). A robust

understanding of accounting standards, legislation, and technology enhances auditors' capacity to identify

potential instances of management fraud.

Questioning Mind

Most conducted research highlights a positive correlation between a questioning mindset and fraud detection.

Nevertheless, some studies present contrasting findings. In ‘The Influence of Professional Skepticism on Fraud

Detection: The Case of Malaysian Non–Big 4 Auditors’ by Nazri et al. (2023), a survey of 200 non-Big 4

auditors in Malaysia revealed a significant positive relationship between a questioning mindset and fraud

detection. The study underscores the need for professional skepticism in non-Big 4 firms to enhance audit

quality.

Gabryela (2017) explored the application of professional skepticism among government internal auditors in

Central Java. She found that a questioning mindset is evident in the respondents’ rejection of statements

regarding the lack of clear evidence. Forensic auditors consistently ask questions, demonstrating a critical and

open-minded approach (Gabryela, 2017). Sayed Hussin and Iskandar (2015) assessed skepticism traits among

auditors in Kuala Lumpur and found that auditors harbour doubts about the accuracy of audit evidence,

emphasising the importance of maintaining a questioning approach for accurate audit results. In contrast, Dudy

Satyawan et al. (2022) found that a questioning mindset, measured by Hurtt's (2010) scale, has no effect on

fraud detection among auditors at KAP in Indonesia. The emphasis on adhering to client-specific standards and

historical reporting appears to mitigate the impact of professional skepticism on their ability to detect fraud.

Suspension of Judgement

Nazri et al. (2023) identified a significant positive correlation between the suspension of judgement and

effective fraud detection among auditors, emphasising the meticulous and prudent approach to decision-

making that requires comprehensive evidence before reaching conclusions. Ciołek (2017) and Castro (2013)

also supported this outcome, concluding that skeptical attitudes inherently involve cautious consideration and

deferring decisions until a thorough investigation of information is conducted, thus ensuring high audit quality.

This collective research underscores the crucial influence of suspending judgement on fraud detection in

auditing.

However, Dudy Satyawan et al. (2022) found no correlation between the suspension of judgement and fraud

detection. This finding is primarily because investors rely on timely financial statements for investment

decisions, and prolonged judgement suspension by auditors may cause delays. Additionally, differing degrees

of auditor skepticism across countries and varying market efficiencies lead to distinct consequences. Sayed

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Hussin and Iskandar (2015) found that the suspension of judgement may not be a component of professional

skepticism in the Malaysian context. The absence of this feature suggests that auditors in Malaysia seldom

delay judgements, possibly due to factors like tight deadlines and short timeframes.

Search for Knowledge

Multiple studies consistently indicate a positive relationship between the trait of search for knowledge and

fraud detection among auditors. Gabryela (2017), in her qualitative study on forensic auditors at BPKP

Representative of Central Java Province, found that the search for knowledge enhances the respondents' ability

to detect fraud. According to the author, auditors who demonstrate a commitment to mastering technology and

information systems are better equipped to uncover fraud and streamline the audit process. Ciołek (2017)

emphasised that individuals displaying skepticism, marked by a genuine desire to expand their knowledge,

excel at avoiding oversimplified responses and conscientiously validating conclusions. Such behaviour

contributes to improved fraud detection capabilities. According to Ahmad et al. (2016), forensic accountants

with specialised knowledge in fraud, computer forensics, and legal and financial matters demonstrate superior

capabilities for preventing, detecting, and responding to fraud compared to auditors in Nigeria. This result

suggests that possessing specialised knowledge enhances the effectiveness of forensic accountants in managing

various aspects of fraud more efficiently than auditors. Moreover, the study by Fullerton and Durtschi (2011)

indicates that auditors with elevated levels of skepticism demonstrate a notably stronger inclination to improve

their search for information related to fraud symptoms.

Nevertheless, Gabryela (2017) and Nazri et al. (2023) presented contrasting results to the previously

mentioned findings. Their research identified a negative association between the search for knowledge and

fraud detection. Despite growing concerns about auditors' perceived lack of professional skepticism in their

audit practices, auditors at non-Big 4 firms do not exhibit a sufficient level of professional skepticism,

particularly in actively seeking knowledge. This outcome is attributed to the auditors' concentration on meeting

tight deadlines, limiting their capacity to explore new knowledge for enhancing audit quality (Nazri et al.,

2023).

Based on the preceding considerations, the following hypotheses were developed:

H1: There is a significant positive relationship between a questioning mind and internal auditors’ fraud

detection.

H2: There is a significant positive relationship between suspension of judgement and internal auditors’ fraud

detection.

H3: There is a significant positive relationship between the search for knowledge and internal auditors’ fraud

detection.

Understanding Evidence Provider and Fraud Detection

Interpersonal Understanding

Professional skepticism, as highlighted by Hurtt (2010), involves delving deeper than mere evidence scrutiny.

It entails grasping the motivations and credibility of evidence providers and emphasising human factors when

assessing evidence (Hurtt, 2010). Auditors must consider potential fraud triggers, such as incentives, pressure,

and rationalisations (Hurtt, 2010). This heightened skepticism allows auditors to anticipate deceit in

communication and appreciate diverse viewpoints (Hurtt, 2010). Recognising the significance of interpersonal

understanding, often overlooked, is vital for detecting false information (Castro, 2013; Hurtt, 2010). Auditors

lacking this insight may struggle with fraud detection (Castro, 2013; Hurtt, 2010). Skeptical auditors challenge

assumptions and address ambiguous intentions (Ciołek, 2017), aligning with ISA 300's adaptability

requirement (IFAC, 2009b). Internal auditors who understand dishonesty cues adjust strategies to pre-empt

suspicion (Castro, 2013). This adjustment underscores the practical value of interpersonal understanding in

audits.

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Nazri et al. (2023) highlighted the importance of auditors avoiding sole reliance on client recommendations

and stressed a thorough verification for information validity in audit decision-making. Their study revealed a

strong positive correlation between interpersonal understanding and fraud detection, emphasising that auditors

with this trait can identify irregularities by comprehending their clients' intentions. The research concluded that

auditors leverage interpersonal understanding to grasp clients' rationale, thus fostering positive work

relationships (Nazri et al., 2023). In contrast, Sayed Hussin and Iskandar (2015) tackled challenges in

implementing skepticism in the Malaysian context due to limited literature and unclear guidelines. Despite

insights from Hurtt (2010), their study affirmed a positive correlation between interpersonal understanding and

professional skepticism. It suggested that enhanced professional skepticism in fraud detection occurs when

auditors grasp client actions, enabling vigilance toward changes in management behaviours and investigation

of unusual circumstances (Sayed Hussin & Iskandar, 2015).

Similar to the findings of Siew et al. (2018), which suggested that interpersonal understanding does not

significantly correlate with auditors' fraud detection, Dudy Satyawan et al. (2022) also indicated that

interpersonal understanding does not have a significant impact on fraud detection. According to Dudy

Satyawan et al. (2022), despite the respondents' strong tendency to comprehend management behaviours, their

inability to detect fraud implies a lack of understanding of the client's industry and business risks. This

deficiency ultimately hinders the effectiveness of auditors in fraud detection.

Based on the above arguments, the fourth hypothesis is proposed as follows:

H4: There is a significant positive relationship between interpersonal understanding and internal auditors’

fraud detection.

Auditor Initiative to Act on Evidence and Fraud Detection

The final aspect of professional skepticism, as described by Hurtt (2010), involves two important qualities:

self-confidence and self-determination. These traits are crucial for auditors to act decisively on the evidence

they have gathered. Rather than simply accepting information, auditors with self-confidence are more likely to

ask probing questions and seek deeper understanding. Additionally, being self-determined means that skeptical

auditors trust their judgement about the validity of assertions, even when others may try to persuade them

otherwise. In essence, these qualities provide auditors the confidence and independence to make informed

decisions, strengthening the overall integrity of the audit process (Hurtt, 2010).

Self-Confidence

Self-confidence, as described in psychological studies, is a belief in one's abilities and self-worth, enabling

resistance to persuasion (Hurtt, 2010). High self-confidence allows auditors to contest others' premises and

conclusions, particularly in face-to-face interactions, emphasising skepticism in acknowledging evidence

(Castro, 2013; Ciołek, 2017). This quality empowers auditors to resist influence, maintain autonomy (Ciołek,

2017), and gather ample proof during audits (Hurtt, 2010). Internal auditors with high self-confidence are less

likely to be intimidated or influenced by management, ensuring appropriate conclusions, while low self-

confidence may hinder auditors in defending their judgements (Sayed Hussin & Iskandar, 2015). In summary,

maintaining a high level of professional skepticism involves displaying substantial self-confidence to ensure

appropriate audit conclusions. Research in the field shows a nuanced picture of the relationship between self-

confidence and fraud detection, revealing both positive and negative correlations. Some studies suggested that

higher self-confidence among auditors can enhance their vigilance and determination, leading to improved

fraud detection. Conversely, other research indicated that excessive self-confidence may contribute to the

overestimation of one's abilities, potentially hindering effective fraud detection efforts.

Bogdan et al. (2017) examined the impact of individual optimism, risk-taking, and self-confidence on the

accounting judgement of Romanian accountants. They identified adequate accounting judgement as being

"logical, consistent, and substantiated" (Bogdan et al., 2017, p. 329), and their research concluded that the self-

confidence of Romanian accountants is directly tied to their perspectives on factors influencing judgement and

decision-making in accounting. Furthermore, during a survey assessing the efficiency of resource allocation

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and legitimacy of well-educated and seasoned governmental auditors in Taiwan, Su et al. (2016) determined a

positive relationship between self-efficacy and mission performance. This finding suggests that elevated self-

efficacy contributes to increased motivation, effort, persistence, and overall success among governmental

auditors in Taiwan.

Nazri et al. (2023) discovered a significant negative correlation between self-confidence and fraud detection,

highlighting the potential for an overly confident demeanour. This arrogance may lead individuals to

overestimate their abilities, risking misjudgement beyond realistic parameters. Focusing on auditors in

Indonesian public accounting firms, Dudy Satyawan et al. (2022) investigated whether skeptical traits,

including self-confidence, could prevent fraud. Surprisingly, the study also found that high self-confidence did

not enhance fraud detection, suggesting that elevated self-confidence, without experience, does not improve

auditor skepticism in detecting management fraud. Likewise, Owhoso and Weickgenannt's (2009) study,

which investigated the correlation between auditors' self-assessment skills and practical performance by

scrutinising concerns about overconfidence and potential mismatches, found no substantial link between

auditors' self-perceived abilities and their actual audit performance.

Self-Determination

The IPPF (2019) emphasised that internal auditors must maintain objectivity, resist external influence, and

refrain from deferring to others' opinions. A high degree of professional skepticism enables auditors to be less

swayed by external opinions and more concerned with their independent assessment of truthfulness.

Professional skepticism, requiring personal autonomy and moral freedom, is crucial for self-determination in

auditors. AICPA (2014) similarly mandated independence of mind and appearance, ensuring auditors execute

services without influence, exercise impartiality, and maintain professional skepticism. Independence in

appearance prevents compromising integrity, objectivity, or skepticism, reinforcing the importance of auditors'

unbiased judgement and autonomy.

Collectively, the investigations conducted by Nazri et al. (2023) and Siew et al. (2018) sought to explore

comprehensively the influence of Hurtt's (2010) professional skepticism traits on auditor fraud detection. Both

studies revealed a significant positive correlation between self-determination and fraud detection, indicating

auditors' ability to independently assess data suitability and minimise reliance on client-provided information,

emphasising the identification of inconsistencies (Nazri et al., 2023). Siew et al. (2018) additionally noted that

auditors with self-determination exhibit heightened attention to inconsistencies, crucial for forming

independent judgements based on evidence and resisting external influence.

Septian and Febrianti (2022) and Hamilah et al. (2019) examined how independence affects the fraud detection

abilities of auditors in the government sector and the pharmaceutical industry in Central Java. Septian and

Febrianti (2022) noted a positive relationship between auditors' independence and their effectiveness in

identifying fraud. Similarly, Hamilah et al. (2019) revealed a significant positive correlation between internal

auditor independence and fraud detection, indicating that an independent internal auditor equipped with high

integrity and objectivity remains free from undue influence.

While several studies established a substantial positive link between self-determination and fraud detection,

Hatuwe et al. (2022) presented a contrasting perspective. In their investigation into the factors influencing

fraud detection in financial statements, the study uncovered that independence had no impact on fraud

detection despite underscoring the necessity for independent auditors to possess qualities like honesty,

integrity, objectivity, mental and physical fitness, and resistance to external influence when expressing audit

opinions. The study suggested that situations involving potential bribery may compromise the auditor's

independence.

As a result of the above considerations, the fifth and sixth hypotheses are proposed as follows:

H5: There is a significant positive relationship between self-confidence and internal auditors’ fraud detection.

H6: There is a significant positive relationship between self-determination and internal auditors’ fraud

detection.

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RESEARCH METHODOLOGY

Data Collection

In undertaking this study, a questionnaire survey was used to examine the influence of professional skepticism

traits of internal auditors on fraud detection. The respondents of the present study were internal auditors

registered with IIA Malaysia. Internal auditors were chosen due to their significance in anti-fraud controls, as

indicated by the ACFE's Global Study on Occupational Fraud and Abuse (2020). Despite internal audits

detecting a small percentage of fraud incidents, this study pointed out the need for an efficient internal audit

department and robust controls. According to the IIA Malaysia’s annual report for 2022, there were 3,127

registered members. This study used simple random sampling from the total sampling frame to ensure equal

selection chances for all registered members. Hence, to ensure an adequate sample size, 400 questionnaires

were distributed (rounding up to 327). The questionnaire was formatted in Google Forms, with links shared via

Microsoft Teams with internal auditors working in the same office as this researcher and primarily through

WhatsApp to targeted external respondents. A total of 150 questionnaires were received and analysed,

resulting in a response rate of 37.5%. Following a brief review by the researcher, all the returned

questionnaires were found to be suitable for further analysis.

Research Instrument

This study employed a structured and closed-ended questionnaire to collect data. It served as an instrument

with a series of statements designed to elicit information from the respondents. The nominal and ordinal

measurement scales were applied in this study. The questionnaire comprised three sections: Section A

(demographic information), Section B (six professional skepticism traits), and Section C (fraud indicators

covering nine constructs). Sections B and C were tailored to address the research objectives and questions. The

items for Sections B and C were structured as shown in the Appendix. Regarding Sections B and C, an interval

scale in the form of a 6-point Likert scale was implemented. This scale enhances data accuracy by excluding a

neutral option. This study’s questionnaire incorporated the 6-point Likert scale for scoring, allowing a swift

measurement of agreement or disagreement with six different scale rates ranging from ‘1’ to ‘6’. For Section

B, ‘1’ signified ‘strongly disagree’, and ‘6’ denoted ‘strongly agree’, while for Section C, ‘1’ indicated ‘less

likely’, and ‘6’ represented ‘most likely’.

Section A of the research instrument focuses on the respondents’ demographic details. A nominal scale was

used for variables like gender, while an ordinal scale was employed for variables such as age, professional

qualifications, years of experience, and job position.

Section B of the questionnaire requires respondents to respond to 6 traits of professional skepticism. These

traits are divided into three categories: examination of evidence (questioning mind, suspension of judgement,

search for knowledge), understanding evidence providers (interpersonal understanding), and auditor initiative

to act on evidence (self-confidence and self-determination), as the independent variables. An interval scale in

the form of a 6-point Likert scale was implemented. This scale enhances data accuracy by excluding a neutral

option. This study’s questionnaire incorporated the 6-point Likert scale for scoring, allowing a swift

measurement of agreement or disagreement with six different scale rates ranging from ‘1’ to ‘6’. For Section

B, ‘1’ signified ‘strongly disagree’, and ‘6’ denoted ‘strongly agree’ (Hurtt, 2010). The first category

(examination of evidence) questioning mind represents the inquisitive mindset which is associated with

curiosity and interest; suspension of judgement refers to an approach in which auditors delay forming

judgements until they have acquired adequate audit evidence to support a conclusion; and search for

knowledge involves a profound curiosity to acquire knowledge for its intrinsic value, rather than merely

confirming a conclusion. The second category (understanding evidence providers), interpersonal

understanding, involves comprehending the motives and integrity of the provider of evidence. The last

category (initiative to act on evidence), self-confidence, pertains to the sense of self-value and confidence in

one's capabilities, and self-determination represents the auditor's capacity to assess the sufficiency of

information as evidence for making an audit judgement.

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Section C contains 10 instruments for assessing potential fraud indicators by examining corporate culture,

relationships with outside parties, financial pressures, fraud opportunities, personal symptoms, personal

realisations, demographic indicators, accounting practice indicators, financial statement indicators, and neutral

fraud situations for fraud detection (Fullerton & Durtschi, 2011). An interval scale in the form of a 6-point

Likert scale was implemented. This scale enhances data accuracy by excluding a neutral option. This study’s

questionnaire incorporated the 6-point Likert scale for scoring, allowing a swift measurement of agreement or

disagreement with six different scale rates ranging from ‘1’ to ‘6’. For Section C, ‘1’ indicated ‘less likely’,

and ‘6’ represented ‘most likely’.

Data Analysis

In examining how professional skepticism traits influence internal auditors’ fraud detection, correlation and

multiple regression analysis were conducted to explore the predictive ability of the professional skepticism

traits on fraud detection (Pallant, 2007). The independent variables include 6 traits of professional skepticism.

These traits are divided into three categories: examination of evidence (questioning mind, suspension of

judgement, search for knowledge), understanding evidence providers (interpersonal understanding), and

auditor initiative to act on evidence (self-confidence and self-determination). The dependent variable is fraud

detection. The details are outlined below to represent the regression equation model.

Model 1: 𝐹𝐷 = 𝛽0 + 𝛽1 𝑄𝑀 + 𝛽2 𝑆𝐽 + 𝛽3 𝑆𝐾 + 𝛽4 𝐼𝑈 + 𝛽5 𝑆𝐶 + 𝛽6 𝑆𝐷 + 𝜀

Where;

: Fraud Detection

: Questioning Mind

: Suspension of Judgement

: Search for Knowledge

: Interpersonal Understanding

: Self-Confidence

: Self-Determination

0

: Constant

1…6

: Slope of the regression surface



: Error term

RESULTS AND DISCUSSION

Demographic Information

Table 1 presents the respondents’ demographic profiles in terms of gender, age, professional certification,

years of experience, and job position. It shows that approximately 54% of the respondents are female, while

46% are male. In terms of age groups, the majority (49%) fall into the 25- to 35-year-old group, followed by

30% in the 36- to 45-year-old age group. The age groups below 25 years old and between 46 and 55 years old

range almost the same, between 9% and 10%. The least represented group is above 56 years old, constituting

0.7% of the respondents. Remarkably, over 58% of the participants lack a professional certificate. The

prevalent certifications include the Association of Chartered Certified Accountants (ACCA), with around 23%

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of respondents holding that qualification. The less common certifications among the respondents include MIA,

Certified Fraud Examiner (CFE), and others.

Most respondents’ work history spans from 2 to 10 years, with a notable 28.7% (43 individuals) representing

the cohort with 6 to 10 years of experience. Those reporting less than 2 years or over 15 years of experience

each constitute approximately 16% of the total respondents. Meanwhile, the segment with 11 to 15 years of

experience constitutes the smallest group, comprising around 11.3% of the sample. The examination of the

respondents' job roles highlights the dominance of junior internal auditors, forming the majority at 38% (57

individuals). The next most significant role is held by senior internal auditors, who account for 26% (39

individuals) of the respondents. A noteworthy 19.3% and 12.7%, equivalent to 29 and 19 respondents, serve as

assistant managers and internal audit managers, respectively. While the role of Internal Audit Director is the

least prevalent, with 4% of respondents holding this position

Table I Demographic Information

Type

Description

Frequency

Percentage (%)

Gender

Male

46.0

Female

54.0

Age

Below 25 years

9.3

25 to 35 years

49.3

36 to 45 years

30.0

46 to 55 years

10.7

56 years old and above

0.7

Professional

Certificate

ACCA

22.7

MIA

6.0

CFE

4.7

None

58.0

Others

8.6

Years of

Experience

Less than 2 years

16.7

2 to 5 years

27.3

6 to 10 years

28.7

11 to 15 years

11.3

More than 15 years

16.0

Job Position

Junior Internal Auditor

38.0

Senior internal auditor

26.0

Assistant Manager

19.3

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Internal Audit Manager

12.7

Internal Audit Director

4.0

Descriptive Statistics

Table II shows the mean scores and standard deviations for all the continuous variables. For the questioning

mind, the highest mean score is 4.86 (sd = 1.117), exemplified by the statement, "I often reject statements

unless I have proof that they are true," indicating that the respondents predominantly agree with this sentiment.

The second independent variable, suspension of judgement, presents the descriptive analysis for the second

independent variable, suspension of judgement. The statement "I like to ensure that I’ve considered most

available information before making a decision" receives the highest mean score of 4.89 (sd = 0.945),

indicating the respondents' agreement to withhold judgement until they have considered the latest available

information. The study explores the descriptive overview of the third independent variable, which focusses on

the pursuit of knowledge. The highest mean score for this variable, at 5.49 (sd = 0.632), corresponds to the

statement, "Discovering new information is fun." This mean value indicates that the respondents generally

express enjoyment in learning and acquiring new information. The fourth independent variable investigated in

the study focuses on interpersonal understanding. The highest mean score for this variable, 5.49 (sd = 0.632),

corresponds to the statement, "Other people’s behaviour doesn’t interest me." This item was reverse-coded,

indicating that the respondents generally disagree with this statement. The highest average rating for self-

confidence is recorded at 4.84 (SD = 0.905), as indicated by the statement "I have confidence in myself,"

suggesting that the respondents possess self-assurance. The final independent variable reveals intriguing

results. Among the participants, the highest average score of 4.31 (sd = 1.068) suggests a tendency for

individuals to somewhat agree that they can usually identify discrepancies in the provided information. The

descriptive analysis conducted in the study focused on the dependent variable, which is fraud detection. The

highest mean score observed for this variable is 4.59 (sd = 1.511), corresponding to the statement, "The

controller was making a lot of adjusting entries the week before the external auditors arrived." This mean value

suggests that the respondents believe that there is a likelihood of potentially fraudulent activities being

performed if the controller makes significant numbers of adjustment postings the week before the external

auditor arrives to cover the fraud trail.

Table II: Descriptive Analysis

Mean

Fraud Detection

150

4.59

1.511

Questioning Mind

150

4.86

1.117

Suspension of Judgement

150

4.89

0.945

Search for knowledge.

150

5.49

0.632

Interpersonal Understanding

150

5.49

0.632

Self-confidence

150

4.84

0.905

Self-Determination

150

4.31

1.068

Multiple Regression Analysis

Tables III and IV provide the results of multiple regression analysis and Pearson correlation, respectively. The

two analyses yielded consistent results, as illustrated in the two tables.

Correlation Coefficient Analysis

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Table III Pearson Correlation Analysis for all variables

Questioning Mind (QM)

Suspension of Judgement (SJ)

0.593

Search for Knowledge (SK)

0.598

0.593

Interpersonal Understanding (IU)

0.516

0.540

0.613

Self-Confidence (SC)

0.440

0.551

0.643

0.494

Self-Determination (SD)

0.123

0.113

0.368

0.222

0.333

Fraud Detection

0.561

0.572

0.657

0.603

0.558

0.334

**. Correlation is significant at the 0.01 level (2-tailed).

*. Correlation is significant at the 0.05 level (2-tailed).

Table IV: Multiple Regression Analysis

Standard Coefficient

t - value

Significance

Variables

(Constant)

Beta

Questioning Mind

Suspension of Judgement

Search for Knowledge

Interpersonal Understanding

Self-Confidence

Self-determination

0.164

0.153

0.211

0.222

0.112

0.132

2.168

1,939

2.334

2.982

1.456

2.142

0.032

0.055

0.021

0.003

0.148

0.034

: 0.559

Adjusted R²: 0.54

Notes: * significant at 0.05

The first objective of this study is to examine the relationship between internal auditor examination of

evidence characteristics and fraud detection. This objective was further broken down into three hypotheses

covering three traits of professional skepticism, which are questioning mind, suspension of judgement, and

search for knowledge. Based on the statistical analysis above, a questioning mind has a positive and significant

relationship with fraud detection (Beta = 0.164, t = 2.168, p-value = 0.032). Since the first hypothesis (H1)

suggests that there is a significant positive relationship between questioning mind and internal auditors’ fraud

detection, it is accepted. The result is consistent with the findings of Nazri et al. (2023), which also found a

significant positive relationship between a questioning mind and fraud detection. Auditors with outstanding

questioning-mind characteristics can enhance their capabilities to detect error or fraud within the financial

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statements. However, the result contradicts Dudy Satyawan et al.’s (2022) findings, which indicated that a

questioning mind has no effect on fraud detection among auditors in Indonesia. They tend to adhere to their

clients’ standards and historical reporting, which hinders them from maintaining a questioning mind.

The second hypothesis (H2) suggests a significant positive relationship between suspension of judgement and

internal auditors’ fraud detection. Table 4.14 above shows that there is a positive but insignificant relationship

between suspension of judgement and internal auditors’ fraud detection, as the p-value exceeds 0.05 (Beta =

0.153, t = 1.939, p-value = 0.055). As such, H2 is rejected. Earlier research conducted by Ciołek (2017) and

Castro (2013) also reached similar conclusions, whereby skeptical attitudes inherently involve cautious

consideration and deferring decisions until a thorough investigation of information is conducted to maintain

the quality of the audit work. However, these findings slightly differ from those of Nazri et al. (2023), who not

only identified a positive correlation between suspension of judgement and effective fraud detection among

auditors but also stressed that the relationship is significant. This finding underscores the meticulous and

cautious approach in decision-making, which necessitates comprehensive evidence before reaching

conclusions. On the contrary, some researchers, such as Dudy Satyawan et al. (2022) and Sayed Hussin and

Iskandar (2015), found no correlation between suspension of judgement and fraud detection, attributing it to

tight deadlines and the need to issue financial statements promptly, which leads auditors to avoid delaying

their judgements.

The third hypothesis (H3) of this study, focusing on the trait search for knowledge, suggested a significant

positive relationship between search for knowledge and internal auditors' fraud detection. The coefficient

analysis results confirm a significant positive correlation between search for knowledge and internal auditors'

fraud detection (Beta = 0.211, t = 2.334, p-value = 0.021), thus supporting H3. This finding aligns with

previous research by Ahmad et al. (2016), who observed a significant positive relationship between the search

for knowledge and fraud detection. They noted that specialised knowledge in fraud and related fields enhances

forensic accountants' ability to address fraud compared to auditors in Nigeria. Additionally, auditors with high

levels of professional skepticism are more likely to have a better understanding of fraud-related issues.

Moreover, Gabryela (2017) and Ciołek (2017) also found a positive correlation between the search for

knowledge and fraud detection. Gabryela (2017) highlighted that auditors proficient in technology are more

effective at detecting fraud, while Ciołek (2017) demonstrated that being skeptical and eager to learn aids

auditors in detecting fraud. However, studies by Nazri et al. (2023) yielded different results, indicating a

negative relationship between the search for knowledge and fraud detection. We attribute this discrepancy to

auditors' concerns about meeting deadlines, which limit their ability to explore new knowledge.

When examining the relationship between internal auditors' examination of evidence characteristics and fraud

detection, it is concluded that only two out of three traits, which are questioning mind and searching for

knowledge, are significantly and positively related to fraud detection. In contrast, suspension of judgement

does not significantly affect internal auditors' ability to detect fraud. This finding can be attributed to the

cultural and time constraints faced by internal auditors in Malaysia, who are often pressured by top

management to reach conclusions quickly, preventing them from fully applying their suspension of judgement

until they have gathered sufficient and up-to-date information. However, it can be concluded that internal

auditors in Malaysia exhibit a high level of questioning mindset in their work and are consistently eager to

acquire new knowledge in order to make accurate decisions and conclusions.

The second objective of this study is to examine how internal auditors' understanding of evidence providers

relates to fraud detection, focusing on the professional skepticism trait of interpersonal understanding, as

outlined in the fourth hypothesis (H4). H4 suggests a significant positive correlation between interpersonal

understanding and fraud detection. The regression results in Table 4.15 indicate a significant positive

relationship between interpersonal understanding and fraud detection (Beta = 0.222, t = 2.982, p-value =

0.003). Thus, H4 is accepted. This finding aligns with Nazri et al. (2023), who found a strong positive

correlation between interpersonal understanding and fraud detection, emphasising that auditors who grasp

clients' intentions well are better at spotting irregularities. However, Siew et al. (2018) and Dudy Satyawan et

al. (2022) argued that interpersonal relationships do not significantly impact fraud detection, stating that, while

understanding management behaviour is beneficial, a lack of comprehension of clients' businesses and

industries can impede the effectiveness of fraud detection.

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Hence, it can be concluded that there is a positive and significant relationship between internal auditors'

understanding of evidence providers and fraud detection. Internal auditors, who understand management's

intentions and behaviours better, can identify and uncover suspected fraudulent activity. This thorough

understanding enables auditors to go through surface-level data and detect subtle signals of fraud that would

otherwise go unnoticed. Internal auditors can better protect firms from fraudulent practices by appropriately

analysing management's actions and motivations.

The final objective of this study is to investigate how an auditor's initiative to act on evidence relates to fraud

detection. Two professional skepticism traits categorised under the last category are self-confidence and self-

determination. Hypothesis 5 (H5) suggests a significant positive relationship between self-confidence and

fraud detection. According to the statistical regression analysis, there is a positive relationship between self-

confidence and fraud detection (Beta = 0.112, t = 1.456, p-value = 0.148) (see Table 4.14). However, the

relationship is insignificant, as the p-value is above 0.05. Thus, H5 is rejected. The outcome, however, is

consistent with other studies, which noted a positive relationship between self-confidence and fraud detection.

It is also similar to the research by Su et al. (2016), which found a positive association between self-confidence

and mission performance among governmental auditors in Taiwan, suggesting that increased self-confidence

boosts motivation, effort, persistence, and overall success. This finding also aligns with the conclusions drawn

by Bogdan et al. (2017), who found a direct link between the self-confidence of Romanian accountants and

their perspectives on factors influencing judgement and decision-making in accounting. However, in contrast,

Nazri et al. (2023) observed a significant negative relationship between self-confidence and fraud detection,

underscoring the potential drawbacks of excessive confidence, which may lead individuals to overestimate

their abilities and make misjudgements. Conversely, Dudy Satyawan et al. (2022) and Owhoso and

Weickgenannt (2009) found no correlation between self-confidence and fraud detection or actual audit

performance, suggesting that experience plays a crucial role in this regard.

Finally, the sixth hypothesis (H6) proposes a significant positive association between self-determination and

fraud detection. The statistical analysis results in Table 4.15 confirm this hypothesis, revealing a positive and

significant correlation between self-determination and fraud detection (Beta = 0.132, t = 2.142, p-value =

0.034). Therefore, H6 is supported. This finding is consistent with previous studies conducted by Nazri et al.

(2023), Hamilah et al. (2019), and Siew et al. (2018), all of which underscored the significant positive

relationship between self-determination and fraud detection. These researchers suggested that independent

auditors with self-determination exhibit heightened diligence in assessing evidence suitability and identifying

document inconsistencies, thereby enhancing fraud detection effectiveness (Hamilah et al., 2019; Siew et al.,

2018). However, the findings contrast with those of Hatuwe et al. (2022), who concluded that independence

has no impact on fraud detection, indicating a risk of auditors overlooking fraud if independence is

compromised, particularly in cases involving bribes.

Lastly, only one trait within the category of auditor initiative to act on evidence has a significant positive

impact on internal auditors: self-determination. Although self-confidence is highlighted by Hurtt (2010) as a

trait of professional skepticism, it does not influence fraud detection among internal auditors in Malaysia.

Auditors with high self-confidence often overestimate their abilities, and confidence alone does not enhance

fraud detection if internal auditors lack sufficient experience. In contrast, internal auditors with high self-

determination are more likely to be independent, objective, and less easily influenced by management.

In summary, the descriptive analysis reveals that the majority of respondents frequently reject statements until

they have evidence to support their truthfulness, prefer to gather ample information before making decisions,

express enjoyment in discovering new information, display curiosity about human behaviour, possess self-

confidence, and typically detect inconsistencies in explanations. Before proceeding with further analysis,

reliability and normality tests were conducted to evaluate the normality and reliability of the data. The findings

indicate that the data is normally distributed and reliable for further analysis. Furthermore, correlation

coefficients were computed to ascertain the presence of relationships between all the variables tested in this

study and to determine their strength and direction. The findings indicate the absence of multicollinearity

issues among the variables, as none of the correlations exceed 0.70.

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Finally, a multiple regression analysis was performed to explore the relationships between fraud detection and

questioning mind, suspension of judgement, search for knowledge, interpersonal understanding, self-

confidence, and self-determination among internal auditors in Malaysia and thus, testing the hypotheses

proposed in this study. The results indicate that a questioning mind, a search for knowledge, interpersonal

understanding, and self-determination have significant positive relationships with fraud detection. However,

suspension of judgement and self-confidence have a positive but insignificant correlation to fraud detection. In

conclusion, maintaining a questioning mindset, continuing to explore and learn new knowledge, being

attentive to human behaviours, and resisting external influences significantly enhance fraud detection among

internal auditors in Malaysia. Conversely, delaying decisions until sufficient information is considered and

maintaining high confidence levels do not significantly improve fraud detection. Given the study's emphasis on

individual and organisational factors, enhancing professional skepticism traits among internal auditors could

be advantageous for the organisation. This initiative could potentially bolster fraud detection capabilities,

thereby reducing company losses.

Implications Of The Study, Limitations And Suggestions For Future Research

This study has a theoretical implication for Attribution Theory. Several studies have applied the attribution

theory to explore the relationship between auditors’s professional skepticism traits and fraud detection. This

study has provided empirical evidence on how specific traits of professional skepticism would have an impact

on internal auditors’ fraud detection. By linking these professional skepticism traits to fraud detection, the

study highlights how internal auditors attribute causes to potential fraud events. This enhanced our

understanding of the cognitive and behavioural processes that auditors employ in their evaluations.

Furthermore, this study provides an extension to the attribution theory, as its application to professional

skepticism in auditing broadens the theory’s scope. Traditionally, attribution theory focused on social

psychology. However, this study has demonstrated its relevance for both organisational behaviour and forensic

accounting. This is through illustrating how internal auditors' professional skepticism contributes to their

ability in fraud detection and hence, reduces the fraud impact on the organisation.

This study’s findings have implications for internal auditors and the regulatory bodies overseeing their work in

Malaysia. This study holds serious consequences for professional internal auditors. Understanding how these

traits impact fraud detection, internal auditors can refine their practices to better detect and prevent fraudulent

activities within their organisations. Prioritising the continuous development of professional skepticism traits

can enhance their fraud detection capabilities, strengthening their role in safeguarding against fraud.

Furthermore, this research highlights the importance of maintaining a questioning mindset, suspending

judgement, seeking knowledge, understanding interpersonal dynamics, and fostering self-confidence and

determination in auditing practices. By incorporating these traits in their professional approaches, internal

auditors can effectively navigate complex organisational environments and mitigate fraud-related risks.

Specifically, regulatory bodies, such as IIA Malaysia, play an important role in establishing standards and

guidelines for internal auditors’ professional conduct and practices. They may need to consider revisiting the

existing standards to emphasise the development and maintenance of professional skepticism traits among

internal auditors. This act could involve implementing training, education, and continuous professional

programmes focused on enhancing internal auditors’ professional skepticism. Furthermore, regulatory bodies

could engage in outreach and awareness programmes to educate internal auditors about the significance of

maintaining professional skepticism in fraud detection. The regulatory bodies need to take proactive steps to

promote its development and integration into auditing practices by recognising the pivotal role of professional

skepticism in enhancing fraud detection capabilities among internal auditors.

This study has several limitations. Firstly, all variables were assessed using a 6-point Likert scale, restricting

the internal auditors' responses to the scale provided in the questionnaire. As professional skepticism traits are

associated with human attitudes, evaluating these characteristics numerically may be subjective. Consequently,

the results may not capture the respondents' opinions fully and accurately. Furthermore, this study examined

only the six professional skepticism traits delineated by Hurtt (2010). The results of the multiple regression

analysis show that these traits only explain 55.9% of the variance in fraud detection. This investigation did not

include the remaining 44.1% of the explanatory variables, potentially overlooking other significant factors

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pertinent to the research. As stated earlier, this study used a 6-point Likert scale to gauge all its variables.

Given that professional skepticism traits are linked to human attitudes, incorporating open-ended questions

alongside the structured items would allow respondents to offer more detailed explanations and insights. This

approach would improve the data by enabling participants to articulate their thoughts, experiences, and

perspectives in their words, enhancing depth and richness. Moreover, combining survey questionnaires with

interviews can further add value to the research outcomes. Surveys offer an efficient means of gathering

quantitative data from a sizable sample, while interviews facilitate deeper exploration of responses,

clarification of ambiguities, and examination of complex issues. By leveraging both methods, researchers can

integrate findings, thereby enhancing the reliability and validity of the results.

In future studies, researchers could enhance the professional skepticism model by introducing additional

independent variables or other control variables. Internal auditors' fraud detection may be influenced by factors

beyond professional skepticism traits, such as their competence, independence, objectivity, experience, and

audit time pressure (Agustina et al., 2021), as well as role conflict, the complexity of assignments, role

obscurity, and locus of control (Atmadja & Kurniawan Saputra, 2018). Additionally, it is advisable to refine

the professional skepticism model for future investigations, as proposed by Hurtt (2010). Notably, among the

six characteristics of professional skepticism examined by this study in the Malaysian context, suspension of

judgement and self-confidence appear to exert the least significant influence. Therefore, the refined model

could involve identifying more relevant constructs to predict their impact on internal auditors' fraud detection.

Future research could also adopt a mixed-methods approach, combining quantitative surveys with qualitative

interviews or case studies to gain deeper insights into how skepticism traits manifest in real-world fraud

detection scenarios. Expanding the sample size and including internal auditors from diverse industries or

different countries would enhance the generalisability of the findings. Additionally, using longitudinal data

could help establish causal relationships between skepticism traits and fraud detection effectiveness over time.

CONCLUSION

In summary, this study provides valuable insights to stimulate interest in this field and make way for future

research on ethical judgement. To a certain degree, the empirical findings of this study support the goal of

enhancing fraud detection by internal auditors, which will improve their effectiveness.

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