Love of Money and Auditor Ethical Assessment
Fraud Perception Analysis
Evita Puspitasari and Mustika Riskafuri
Universitas Padjadjaran
Keywords: Gender, Total Income, Ethical Perception, Love of Money.
Abstract: The aim of this study is to investigate the relation between the auditor ethical perception and the love of
money that can drive the fraud, along with the age, gender, and income as other factors. The research
method of this study is Path Analysis with decomposition model. The result found that there was a
correlation for gender and love of money. Male tended to have the higher-level love of money. The result
implied that male tended to put money as an important thing. We assumed this happened since in eastern
culture it was the male that had responsibility in fulfilling the needs of his family. Further, this study proved
that the respondent income did not affect the love of money. The finding indicated that the amount of salary
respondents had did not correlate to the level of the love of money. The wealth of people was more
determined by his/her mindset, not by the income they got. In this study, we also found that gender and
income did not influence the auditor ethical perception about fraud. Both male and female auditor had
indifferent fraud ethical perception; and income of the respondents did not affect the fraud ethical
perception of auditor. Finally, this study found that the respondents’ level of love of money did not correlate
with the fraud ethical perception of auditor.
1 INTRODUCTION
Recently, the accountant profession is facing many
issues which are related to fraud. Enron (2001),
WorldCom (2002) Tyco (2002) are accounting
scandals happened. The Sarbanes-Oxley (SOX) Act,
held by U.S. Congress in July 2002, is a crucial step
that will lead to the rules and code of ethic
improvement. But fraud actions still happened.
American Insurance Group (2005), PT Kereta Api
Indonesia (2006), Tesco (2014) and Toshiba (2015)
scandals are the example of the most current issue.
Therefore, it cannot be denied that the reliability of
accountant profession has been declined.
Ethical perception of accountant has become one
of most interesting research materials in order to
examine what factors that will reduce fraud. This
research is conducted to examine the ethical
perception of accounting students in Indonesia.
Individual behavior is derived from external and
internal factors. External factors are factors which
come from outside of the individual (cultures,
economic and social factors) and internal factors
come from the individual itself (knowledge,
perception, etc.)
Perception is the way someone look at something
and believe that it is the right things to do. Based on
expectancy theory, perception can be the basis of
someone’s motivation to perform some actions.
Money is believed to become an important
motivator. In the business, managers frequently use
money to control and motivate employees
(Milkovich and Newman, 2002). McClelland said,
money is an important aspect of everyday life.
Although the money is used universally, the
meaning and importance of money is not universally
accepted (Tang, 1992).
Love of money can be explained literally as the
individual perception about money; how they
respect money. Based on Tang and Chiu (2003) and
Elias and Magdy (2010), love of money has direct
impact related to personal unethical behavior.
Money ethics scale (MES) developed by Tang
(1992) to measure the individual’s love of money.
This research is closely related with Elias and
Magdy (2010) study, where the results found that the
love of money is significantly related to perceptions
of cheating. Money worshippers view cheating
actions as more ethical followed by money‐admirers
and money‐repellents who view such actions as
Puspitasari, E. and Riskafuri, M.
Love of Money and Auditor Ethical Assessment - Fraud Perception Analysis.
In Proceedings of the 1st International Conference on Islamic Economics, Business, and Philanthropy (ICIEBP 2017) - Transforming Islamic Economy and Societies, pages 331-334
ISBN: 978-989-758-315-5
Copyright © 2018 by SCITEPRESS – Science and Technology Publications, Lda. All rights reserved
331

more unethical. The purpose of this study is to
investigate the relation between the auditor ethical
perception and the love of money that can drive the
fraud, along with the age, gender, and income as
other factors.
2 METHODS
2.1 Research Model
Figure 1: Path analysis model.
2.2 Analysis of Variables
2.2.1 Ethical Perception
The endogenous variable in this study is ethical
perception of accounting students. The ethical
perception in this study is determined from
individual's view to accounting fraud that is occurred
(Elias and Magdy, 2010). In order to measure ethical
perception, this study uses the scenarios applied by
Elias and Magdy (2010), consist of four scenarios of
fraudulent act.
 Scenario 1 deals with early recognition of
revenues (an example of earnings
management).
 Scenario 2 deals with classifying long-term
marketable securities as current, to improve the
current ratio.
 Scenario 3 deals with including some of the
consigned inventory as assets.
 Scenario 4 deals with not reporting contingent
liabilities (a violation of the conservatism
principle).
2.2.2 Gender
There is no specific measurement to measure the
gender factor. In this study, gender will be
determined as dummy variables to separate male and
female; male is 0 and female is 1.
2.2.3 Love of Money
Love of money measures the value of individual’s
desire to money, although not for their mutual needs
(Tang et al., 2004). In this research, love of money
will be measured by using Money Ethics Scale
(MES) which is developed by Tang (1992). MES is
regarded as the best developed survey to measure
individual's attitude towards money; contains 30
items of question which resulted in 6 indicators
(good, evil, achievement, respect, budget, and
freedom) with regard to the love of money.
2.2.4 Population and Samples
Population in this research is the employees of
Internal Government Auditor (BPKP/Badan
Pengawasan Keuangan dan Pembangunan Negara).
Among 1.127 employees, we use 100 staffs as our
respondent randomly.
3 RESULTS AND DISCUSSION
3.1 Hypotheses Testing – Path Analysis
After the normality test is done and the data have
normal distribution, our next step is to determine the
path coefficient and the path diagram of each
construct or sub-structure. For this step, I use SPSS
20.0 to measure the path coefficient and LISREL to
create the path diagram.
Figure 2: Sub structure 1.
Figure 3: Sub structure 2.
ICIEBP 2017 - 1st International Conference on Islamic Economics, Business and Philanthropy
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Figure 4: Path model.
3.2 Testing Hypothesis
For testing the hypothesis, we can use F-test for
simultaneous test and two-sided t-test for partial test;
the result will be compared with the value of F-table
and t-table for α = 10% to find out any exogenous
variables that affect the endogenous variable (love of
money). However, we can also use look at sig. value
in ANOVA table and coefficient table from SPSS
output.
Table 1: Simultaneous hypothesis testing – model I.
Hypothesis F-
stat
F-table
Decision Sig. Conclusion
Gender and
Income
simultaneously
influence love
of mone
y
7,856 3,090
H
0
rejected
0,001 Sig
Table 2: Partial hypothesis testing – model I.
Path
Coeff
t-stat t-table Decision Sig. Conclusion
-3,963 ± 1,985 H
0
re
j
ecte
d
0,000 Significant
0,148 1,661 H
0
accepte
d
0,883 Not
Si
g
nificant
Table 3: Simultaneous hypothesis testing – model II.
Hypothesis F-stat F-
table
Dec Sig. Conclusion
Gender and
Income and
love of money
on
simultaneously
influence
Ethical
Perception
0,828 2,699
H
0
accepted
0,482 Not Sig
Table 4: Partial hypothesis testing – model I.
Path
Coeff
t-stat t-table Decision Sig. Conclusion
-0,406 ± 1,985
H
0
accepted
0,685 Not
Significant
1,257 -1,661 H
0
accepted 0,212 Not
Significant
-0,968 -1,661 H
0
accepted 0,335 Not
Significant
Table 5: Hypothesis testing – influence through mediation.
H
yp
othesis t-stat t-table Decision
0,2187 ±
1,985
H
0
acce
p
te
d
-0,588 -1,661 H
0
acce
p
te
d
3.3 Gender to Love of Money
From this study, the path coefficient confirms that
male respondents have higher love of money than
female respondents. This result is in accordance with
the psychological studies of Furnham (1984). There
are differences between males and females
according to their perception towards money. The
different perception comes from the culture, where
males are the one who is responsible to earn money
for the family and females are the one who manages
the money. The role differences develop different
perspective towards money. Females tend to be
more traditionalist, retentive, and precautions toward
money than males. Meanwhile, the males are
presumed must earn more money for them and for
their family, then increase the males’ love of money.
This result is consistent with Ratna and Birton, and
Tang (Elias and Magdy, 2010).
3.4 Income to Love of Money
According to our investigation, we find that the
income influences the love of money positively yet
insignificantly. This finding does not support the
proposed hypothesis, that the income influences the
love of money positively and significantly. This
result is in accordance with the study of Tang et al.
(2005). We assume this result shows that learning
process of person in appreciating the money, from
the childhood to the maturity (Tang et.al, 2005).
When time passes by, even the person with the
lower income will be grateful at the certain time.
Further, we believe that this finding caused by the
remuneration system in the BPKP. The employees
get fixed income and also variable income when
they are doing additional assignment. Therefore, the
money is not a problem for them.
3.5 Gender to Ethical Perception
This research finds that both male and female have
the same level of ethical perception. It means, the
proposed hypothesis is rejected. This finding is in
line with the study of Smith and Oakley (1997). We
believe that the prove we find show that both male
and female have earned value education, therefore
Love of Money and Auditor Ethical Assessment - Fraud Perception Analysis
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they give good response when they are faced with
the fraud ethical question.
3.6 Income to Ethical Perception
We find that the income gives positive influence
towards ethical perception, yet insignificantly. This
result rejects the proposed hypothesis. We presume
this evidence is caused because the remuneration
system for the respondent. As auditors, beside get
the fixed income, they also get variable income for
additional assignments they have. Therefore, the
financial needs of them have been already fulfilled
and the income does not influence the ethical
perception.
3.7 Love of Money to Ethical
Perception
We find that the level of money negatively
influences the ethical perception insignificantly. It
means the higher people’s level of love of money, it
does not make that they will behave unethically.
This finding is not in line with other study. Tang and
Chiu (2003) explain that love of money was strongly
related to the concept of “greed”. They also found
the direct path between the love of money and
unethical behavior among employees in Hong Kong.
Tang and Liu (2012) also found that it is not the
income (money), but the motive (love of money)
which cause people to behave unethically. Love of
money may cause the dissatisfaction with income
which leads to unethical behavior of employees; the
more people love money the higher probability of
people will be dissatisfied with their income. The
higher level of love of money tend to make people to
behave more unethically. However, we find
dissimilar result.
We consider this proof indicates that the auditors
in BPKP have a good professional commitment.
Elias (2006) shows when a person has high
professional commitment, it will increase their
ethical perception. This finding is supported by the
fact that the BPKP keep renewing the integrity
agreement with the auditors and other employees.
This contract works as a guarantee that all of the
employees will work with high professional
commitment in accordance to the work ethical
standard.
4 CONCLUSIONS
From this study, gender and love of money that
affect the ethical perception. In term of ethical
perception, both female and male auditor tend to
have same ethical level Considering the fact that this
is a very new topic and the research is still rare,
hence future research is indispensable. The
variables, methods, or population of the study can be
expanded. Also, the population can be taken from
practical and other professional accountants (such as
public accountants, governmental accountants in
BPK, etc.).
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