RESULTS AND INTERPRETATION

The respondents in this study represent the population of the Big Four external auditors in the

Philippines. The total number or respondents in this study is 115. The majority of the

respondents in the gender category are females (66%) followed by male respondents (33%). In

terms of the respondents age, the majority of them fall between the age group of 20-24 years

(98%) and 2% of them are within the age group of 25-29 years. Like the age category, most of

the respondents are single (98%) and only 2% of them are married. Of the respondents, all of

them (100%) hold a bachelors degree and none of them hold professional qualifications. On the

other hand, in terms of firm tenure, 99% of the respondents have served in the current firm for

less than three years and only 1% of them have served in the current firm for three to five years.

The research aims to determine the relationship of the ethical climate, job satisfaction, and

organizational commitment on the turnover intention of external auditors in the Philippines. This

is done through the administration of G Power version 3.0.10 to determine the target sample

size of 115, the distribution of survey questionnaires to external auditors in the Big 4 auditing

firms in the Philippines, the use of SPSS version 19 in generating the coefficients of the

variables and the application of the Pearson Product Moment Correlation Coefficient to evaluate

the results of the questionnaires.

In order to achieve the objectives of the study, there is a need to answer the following questions

and either accept or reject the following hypothesis under the second research question:

1. How do the external auditors from the Big Four Auditing firms perceive the following:
a. Prevailing Ethical climate

a.1 Instrumental Ethical Climate

Table 4.1

Mean Standard Verbal

 Deviation Interpretation

Instrumental 2.63 0.25 Disagree

Based on the data on Table 4.3 above, it can be observed that the mean of instrumental ethical

climate is 2.63 with a standard deviation of 0.25.

Instrumental ethical climate is primarily based on the maximization of self-interest. Employees

identifying an instrumental ethical climate perceive their organizational unit as having norms and

expectations that boost ethical decision-making from an egoistic viewpoint (Cullen & Martin

2006). This is the type of ethical climate in which the people are most likely blinded by self-

interest when it comes to decision making. This just shows that external auditors are more

concerned and focused with the firms interests rather than their own interests.

For this ethical climate, it evident that EC6 (There is room for ones own personal morals or

ethics in this firm) yielded the highest mean of 3.10 which interprets for the auditors agreeing on

the statement that even though the firms are guided by rules, laws and code, they are still

applying their own personal morals and ethics when working. With respect to standard

deviations, it can be observed that EC16 (People are concerned with the firms interests) has

the lowest standard deviation at 0.50. This standard deviation means that the responses of the

external auditors regarding their concern with their firms interest are consistent with one

another.
 a.2 Caring Ethical Climate

Table 4.2

Mean Standard Verbal

Deviation Interpretation

Caring 2.90 0.29 Disagree

Table 4.2 shows that the ethical type which is Caring, has a mean of 2.90 and a standard

deviation of 0.29.

Caring leans toward the interpretation that the external auditors disagree on statements

under category of the said ethical climate. Besides the mean, another thing to be considered in

analyzing the results is the standard deviation. With respect to the standard deviations, this type

of ethical climate exhibits a 0.29 standard deviation. This indicates that there is a consensus on

up to what degree they agree or disagree towards the ethical climate type.

This climate type that falls under the benevolence criterion. Here, atmosphere is based

on concern for others. Individuals have a sincere interest in each others well-being for the

people inside and outside the organization who may be affected by each others ethical decision

(Shephard & Wimbush, 1994). Caring comes in second after Law and Code in garnering the

highest mean and this exhibits that external auditors express concern for others. Their actions

are affected by each others ethical values and decisions.

In this climate type, it was depicted that EC24 (In this firm, everyone is expected, above

all, to work efficiently) garnered the highest mean which is 3.23 that yields the interpretation for

agreeing over the statement. This demonstrates that external auditors work hand in hand in

order to produce a quality output. Everyone in the firm is expected to work diligently in doing the

tasks assigned to the auditor. They usually go beyond to satisfy their judgement towards giving
assurance. With respect to standard deviations, EC24, which is also the statement that had the

highest mean, also depicted the lowest standard deviation. Likewise, the lower the standard

deviation, the less scattered the response which was gathered from the respondents.

a.3 Independence Ethical Climate

Table 4.3

Mean Standard Verbal

Deviation Interpretation

Independence 2.76 0.43 Disagree

Based on the data on Table 4.3 above, it can be observed that the mean of

Independence is 2.76 which leans toward the interpretation that the external auditors disagree

on statements under category of the said ethical climate. Besides the mean, another thing to be

considered in analyzing the results is the standard deviation. Standard deviation is a measure of

dispersion of a frequency distribution which means that the higher the SD, the more dispersed

the responses are. The standard deviation of all the statements under Independence is 0.43

which means that the responses are quite intact with each other.

Independence refers to the climate type where individuals act according to their own

personal moral beliefs. This falls under the principle criterion. In this type of ethical climate, it

specifies that individuals believe they should act on deeply held or personal moral convictions in

order to make ethical decisions (Cullen & Martin, 2006). This just shows that external auditors

do not usually act according to their personal beliefs. Their decisions are affected by outside

forces when determining ethical predicaments.

For this ethical climate, it can be perceived that EC21 (In this firm, people are guided by

their own personal ethics) garnered the highest mean which is 2.90 that yields the interpretation
for disagreeing over the statement. This exemplifies that external auditors are governed for the

public interest because of the standards that they follow in providing services. Thereby reducing

the approaches that promote self-interest such as Independence.

With respect to standard deviations, it can be observed that EC3 (In this firm, people are

expected to follow their own personal and moral beliefs) has the lowest standard deviation at

0.54. This statement incites that providing reasonable assurance in conducting audit, which is

the main service that audit firms conduct, cannot be done when they are ruled by their own

personal beliefs.

a.4 Rules Ethical Climate

Table 4.4

Mean Standard Verbal

Deviation Interpretation
Disagree
Rules 2.83S 0.38

Based on the data on Table 4.4 above, it can be observed that the mean of Rules which

is 2.83 and a standard deviation of 0.38.

This ethical climate yielded a mean of 2.83 which leans toward the interpretation that the

external auditors disagree on statements under category of the said ethical climate. Besides the

mean, another thing to be considered in analyzing the results is the standard deviation. The

standard deviation of all the statements under rules is 0.38 which means that there is an

unanimity within this ethical type.

Rules is the climate type falls under the principle criterion. This pertains to the rules of

conduct accepted by the firm (Shephard & Wimbush, 1994). Given its deontological foundation,

Rules come in third from getting the highest mean which is Law and Code then followed by
Caring. Rules and Law and Code ethical climates have the same basis on giving ethical

decisions.

In this climate type, it was depicted that EC22 (Successful people in this firm strictly

obey the firm policies) garnered the highest mean which is 3.10 that yields the interpretation for

agreeing over the statement. This statement indicates that if the auditors abide by the rules and

policies of the firm, they will become successful and will be promoted to a higher position. With

respect to standard deviations, it can be observed that the same statement which is EC22

generated the lowest standard deviation at 0.50. This statement indicates that the data gathered

for this climate type points tend to be close to the mean.

a.5 Law and Code Ethical Climate

Table 4.5

Mean Standard Verbal

Deviation Interpretation
Agree
Law and Code 3.19 0.45

Table 4.5 shows the mean of Law and Code which is 3.19 and its standard deviation

which is 0.45.

Law and Code yielded a mean of 3.19 which leans toward the interpretation that the

external auditors agree on statements under category of the said ethical climate. This is the

climate type that reaped the highest mean which depicts that it is the prevailing ethical climate

of the external auditors of the Big Four auditing firms in the Philippines. Besides the mean,

another thing to be considered in analyzing the results is the standard deviation. The standard

deviation of all the statements under rules is 0.45 which means that there is a harmony of

responses within this ethical type.

 This ethical climate is under the criteria of principle. Law and code requires that

employees adhere to the codes and regulations of their profession. This particular dimension of

ethical climate would require the employees to adhere to the codes and regulations mandated

by their profession or by the government (Shephard & Wimbush, 1994). External auditors of

auditing firms are regulated given the high risk of fraud where public practitioners might be

involved. Here in the Philippines, the profession is governed by the Code of Ethics for

Professional Accountants and other laws concerning CPAs. The Board of Accountancy (BOA)

formed a Quality Review Commission to facilitate the monitoring of the quality of public practice

here in the Philippines. Consequently, BOA recently revised the Quality Assurance Review rules

as to cope up with the needs of the changing times and provide an improved quality of work of

auditors. These regulations push the auditors to abide by the provisions of law especially in the

public practice.

In this climate type, it was depicted that EC14 (People are expected to comply with the

law and professional standards over and above other considerations) garnered the highest

mean which is 3.28 that yields the interpretation that the external auditors agreeing mostly if not

all for the said statement. In making ethical decisions, external auditors need to consider the law

and professional standards first and foremost. Everyone is expected to do this in the firm and it

is by the norm that they take it above any other choice. With respect to standard deviations, it

can be perceived that EC23 (In this firm, the law or ethical code of their profession is the major

consideration) has the lowest standard deviation at 0.54.

b. Job satisfaction

Table 4.6

Mean Standard Verbal

Deviation Interpretation
Job Satisfaction 2.76 0.30 Disagree

Table 4.6 shows the job satisfaction of the external auditors in the Big 4 auditing firms in

the Philippines. The results show that the respondents yielded a mean of 2.76 and standard

deviation of 0.30.

The question JSQ6 (My colleagues are a source of professional stimulation) has the

highest mean yielding a 3.23 mean. This means that most of the external auditors treat their

colleagues as a source of professional stimulation as this question yielded the most number of

agree among the respondents. Empowerment of employees is a factor that increases employee

job satisfaction. The fact relates when your co-workers are one of your driving forces in the work

place, employees are more empowered and thus, satisfied with their job. (Moyes, G., 2008)

Another question from the job satisfaction part of the questionnaire that yielded the

second to the highest mean of 3.15 is question JSQ14 (My colleagues are an important source

of personal support.) Same factor with the question that yielded the highest mean, external

auditors perceive their colleagues as a significant factor on how satisfied they tend to be

towards their job.

On the other hand, the question that has the lowest mean of 2.02 is the question JSQ11

(My work schedule leaves me enough time for my family). This implies that most of the external

auditors disagree with the statement. This value has a difference of only .03 to yield a

significant number of strongly disagree answer.

Besides the mean, another thing to be considered in analyzing the results is the

standard deviation. In this regard, the question JSQ10 (Work rarely encroaches on my personal

time) has the highest standard deviation at 0.80. This means that the external auditors lack the
consensus in answering this question. Inconsistency arises on how they perceive their work in

the firm as a factor that encroaches on their personal time.

On the other hand, the question JSQ14 (My colleagues are a source of professional

stimulation) which yielded the highest mean in turn also has the lowest standard deviation of

0.51. It indicates that the external auditors are consistent with their response. This is consistent

with the results of the highest mean that indicated a significant number of the respondents

agreed with that statement.

The result of the study with regards to job satisfaction showed that the external auditors

are not satisfied with their job in the auditing firm. According to Moyes, public accounting firms

are considered as one of the industries with turnover issues pertaining to their accounting

professionals. One of the five issues that have contributed to this problem is that most staff

accountants particularly auditors in this case are required to work excessive overtime during tax

season (Larson, 1991). Work in most auditing firms especially during the audit season which is

considered as the busy season require longer hours of work due to deadlines that they need to

accomplish in their client related audits which in turn gives them less time for themselves and

with family as well. Work overload is also associated in determining the level of job satisfaction

among office workers. Schlotz et al (2004) found that work overload leads to lower satisfaction

among employees.

c. Organizational commitment

Table 4.7

Mean Standard Verbal

Deviation Interpretation

Organizational 2.97 0.32 Disagree

Commitment
Table 4.7 shows the organizational commitment of external auditors in the Big 4 auditing firms in

the Philippines. The results show that the answer of the respondents yielded a mean of 2.97

and standard deviation of 0.32.

Based on the results yielded from the Organizational Commitment Questionnaire, the OC6

question (I am proud to tell others that I am part of this firm) has the highest mean among the 11

questions in the questionnaire yielding a mean of 3.32. This means that most of the external

auditors are proud that they are currently working on their respective firm.

Another two questions from the OCQ yielded the mean of 3.22 which garnered the second to

the highest mean. These questions are the OC9 (I am extremely glad that I chose this firm to

work for over others I was considering at the time I joined.) and OC11 (Deciding to work for this

firm was not a definite mistake on my part.). These questions mean that the majority of the

external auditors agreed that they dont regret choosing and joining their current firms. On the

other hand, the question that got the lowest mean is the OC4 (I would accept almost any type of

job assignment in order to keep working for this firm.) with the mean of 2.36.

Besides the mean, another thing considered in analyzing the results is the standard deviation.

The questions that yielded the lowest standard deviation is the question OC5 (I find that my

values and the firms values are very similar.) and OC6 (I am proud to tell others that I am part

of this firm.) with a standard deviation of 0.54. Lower number of standard deviation shows that

the data are clustered closely around the mean. This means that the auditor have an agreement

that their own personal values are the same with their firms values. OC6 also got the highest

mean in all of the questions which means consistency and agreement in their answer that they

are proud in being part of their firms. On the other note, the item that got the highest standard

deviation is OC11 (Deciding to work for this firm was a definite mistake on my part.) with a
standard deviation of 0.75. The item with the highest standard deviation indicates lack of

agreement among the respondents about their answers. Even though this item is one with the

highest mean, the auditors answers are inconsistent with each other.

Overall, this factor gain a 2.97 mean and a 0.32 standard deviation which means that the

auditors disagreed that they are committed to their firms and that they have a consensus in that

result as seen on the low standard deviation. The study of Ismail (2015) yielded the same result

that the auditors are not that committed to the firms that they are currently working for because

it only garnered a mean of 2.68 from a seven-point Likert scale (1=strongly disagree, 7=

strongly agree). However, this contrasts the results of the study of Ohmar & Ahmad (2014)

which stated that the Malaysian external auditors are unbiased on the aspect of their

organizational commitment which mean that they neither agree nor disagree that they are

committed to their firm.

d. Turnover intention

Table 4.8

Mean Standard Verbal

Deviation Interpretation

Turnover Intention 2.67 0.51 Disagree

Table 4.8 shows the turnover intention of the external auditors in the Big 4 auditing firms

in the Philippines. The results show that the respondents yielded a mean of 2.67 and standard

deviation of 0.51.
TOQ11 (I will probably look for a job outside this firm within the next three years.) yielded

a mean of 2.98 (disagree) while TOQ10 (I will voluntarily leave this company within the next

three years.) yielded a mean of 2.93 (disagree) which are the two highest means generated
among all the other questions in the survey questionnaire used. This means to say that the

external auditors in the Big 4 auditing firms are most likely willing to stay in the organization they

belong to in the next three years.

On the contrary, TOQ1 (Presently, I am actively searching for other jobs.) and TOQ5 (I

would seriously consider leaving for even a slightly better position elsewhere.) both yielded the

two lowest means among the other questions in the survey questionnaires used. TOQ1 yielded

a mean of 2.11 (disagree) while TOQ5 yielded a mean of 2.54 (disagree). This means to say

that the external auditors are not actively searching for other jobs and are not thinking of leaving

the organization they belong to in exchange of a better position in other organizations. One

reason that the researchers assume for this is that the external auditors might find the

organization they belong to more important to them than their could-be positions somewhere

else.
Just like TOQ10 (I will voluntarily leave this company within the next three years.) and

TOQ11 (I will probably look for a job outside this firm within the next three years.) which yielded

the highest two means, both questions yielded a standard deviation of 0.62 which is the lowest

standard deviation among all the other questions in the survey questionnaire used. This means

to say that the results of the two questions above are the most consistent and intact. Thus, there

are more external auditors who have the same answer that they are willing to stay in the

organization they belong to than those who are not.

However, TOQ1 (Presently, I am actively searching for other jobs.), TOQ3 (I intend to

leave the organization in the near future.), TOQ4 (I would consider looking for a company that

had excellent project management.), TOQ5 (I would seriously consider leaving for even a

slightly better position elsewhere.) and TOQ6 (I would seriously consider leaving my job for a

position where I could earn more.) all yielded the same standard deviations of 0.75 which is also

the highest standard deviation generated among all the other questions in the survey

questionnaire used. This means to say that the results of the five questions stated above are the
least consistent and intact. Thus, there are different ranges of answers given by the external

auditors for the given questions above.

According to Pradana, et. al., work-life conflict such as sacrificing family time, prioritizing

job over personal life, being unable to separate work and life and having complaints from loved

ones doesnt significantly influence turnover intention because in most newly-hired auditors,

work-life conflicts might not be an important consideration to their career decision. Rhode

(1977), Ferris (1981), Bullen & Flamholtz (1985) also stated that in some firms, there is a high

turnover due to the high level of voluntary turnover among professional auditors who wanted to

experience working in other firms. Since most of the respondents of this study are aged 21 to

24, the external auditors are still building up their careers and still have much more to learn and

experience. Additionally, they might have no family obligations yet that gives no problem with

regard to balancing time. The given facts then support the results of the researchers study that

there is a low turnover intention of the external auditors in the Big 4 Auditing Firms in the

Philippines.

2. What relationship exists between turnover intention and the following:

a. Prevailing Ethical climate

b. Job satisfaction

c. Organizational commitment

Table 4.9

Measure Prevailing Ethical Job Organizational

Climate Satisfaction Commitment

Turnover 0.008 -0.550** -0.441**

Intention

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

Hypothesis # 1: There is an indirect relationship between the firms ethical climate and the

external auditors turnover intention.

Table 4.9 shows the relationship of turnover intention to the prevailing ethical climate (law and

code), job satisfaction and organizational commitment.

Pearson Product Moment Correlation Coefficient says that a negative r indicates a

negative linear relationship between two variables. The closer the absolute value of r to 1, the

stronger correlation there is. The relationship of the prevailing ethical climate to turnover

intention is represented by the correlation coefficient .008. Thus, there is a very low positive

linear correlation between ethical climate and turnover intention, r(115) = 0.008, p < 0.01.

The prevailing ethical climate which is Law and Code generated an insignificant

relationship with turnover intention. This correlation is not even significant as compared to the

relationship of turnover intention with job satisfaction and turnover intention with organizational

commitment. It can be perceived that there is no substantial relation between the prevailing

ethical climate and turnover intention. In support of this, Schwepker (2001) examined the

relationship of ethical climate to turnover intention among salespeople and its results conveyed

that ethical climate is not directly related turnover intention. These two factors may coincide with

each other but they do not directly affect one another. Other external factors related will affect

the relationship of the two variables.

Hypothesis # 2: There is an indirect relationship between the firms job satisfaction and the

external auditors turnover intention.

The relationship of job satisfaction to turnover intention is represented by the correlation

coefficient -.550. Thus, there is a moderate correlation between job satisfaction and turnover

intention, r(115) = -0.550, p < 0.01, since -.550, belongs to the range of 0.50- 0.70.
 The result showed that there is e relationship between job satisfaction and turnover

intention. It means that the higher the job satisfaction is, the lower the intention of external

auditors to leave. Several factors such as compensation, working conditions, and promotions

influence job satisfaction among external auditors.

A study conducted in Jakarta, Indonesia entitled Work Overload and Turnover Intention

of Junior Auditors in Greater Jakarta, Indonesia by Andika Pradana and Imam Salehudin yielded

the same result of a negative relationship between job satisfaction and turnover intention; it

showed that higher job satisfaction significantly reduces turnover intention among junior

accountants in the big 4 auditing firms located in the said country. The authors emphasized that

work overload as one of the significant factors that affects job satisfaction in relation to turnover

intention. Also, work related stress as a major factor for junior auditors to stay is noted in the

said study. Work related stress such as long hours of work, heavy workloads, and conflict with

co-workers are some of the factors that affect job satisfaction among junior auditors that cause

turnover intention (Pradana, A. & Salehudin, I.,2015)

Hypothesis # 3: There is an indirect relationship between the firms organizational commitment

and the external auditors turnover intention.

The relationship of turnover intention to organizational commitment is represented by the the

correlation coefficient -0.441. Thus, there is a low correlation between turnover intention and

organizational commitment, r(115) = -0.411, p < 0.01 , since -0.411 belongs between the range

of -0.30 and -.050.

In a study made by Aryee, Wyatt and Min (2001) entitled Antecedents of Organizational

Commitment and Turnover Intentions Among Professional Accountants in Different Employment

Settings in Singapore, it was found out that organizational commitment, together with job
satisfaction, is one of the main predictors of turnover intention in accountants in Singapore. It

was also supported by Sorensen & Sorensens (1972) statement, quoted from the same study,

that low organizational commitment, together with low job satisfaction, are behaviourally

expressed in turnover intention and even in actual turnover. Given the facts, it can be said that

there is an indirect relationship between organizational commitment and turnover intention.

Thus, the lower the organizational commitment, the higher the turnover intention.