*Potential Independent Variable (IV): Self-certification (present, absent), prior dysfunctional behavior (present,absent)Motivation/PressureMisreporting of Accounting Information±Informal communication of management goals and preferences can have significant impact on employee behavior, evenwhen nonbinding. Thus, how important is it for auditors to understand the more informal goals and objectives ofmanagement to understand the motivation of employees to engage in (or not engage in) dysfunctional behaviors?*Potential Independent Variable (IV): informal managerial goals communicated to employees (present, absent),formal organizational goals (present, absent)±Scarcity of resources leading to high levels of competition between managers to access these resources tends to reducetheir tendency to request more resources than they need. Thus, should audit risk be evaluated as higher in settings wherecompetition for scarce resources is low rather than high?*Potential Independent Variable (IV): level of internal organizational competition for scarce resources (low,moderate, high)±About half of subordinates who are pressured by their superiors to misreport will do so. Thus, to what degree do auditorsneed to understand the nature of the relationship between superiors and subordinates in the organization in terms ofpower and pressure to comply? Does this increased knowledge allow auditors to better understand the likelihood thatmisreporting has occurred?*Potential Independent Variable (IV): level of employee commitment to manager (low, moderate, high), level ofemployee engagement with governance body (low, moderate, high)±To what extent do non-profit organizations face similar pressures as for-profit managers to achieve financial targets andgoals? If pressure is high, to what extent does this impact the auditor’s evaluation of inherent risk assessment?*Potential Independent Variable (IV): number of external stakeholders for the non-profit (low, moderate, high),Dysfunctional Behavior in Organizations: Insights from the Management Control Literature139Auditing: A Journal of Practice & TheoryVolume 37, Number 4, 2018
importance of external stakeholders to funding level for the non-profit (low, moderate, high), significance ofgovernmental funding to the non-profit (low, moderate, high)Being Complicit in Accounting Manipulation±How is the risk of material misstatement impacted by the potential that a superior pressures subordinates to engage indysfunctional behavior? For example, individual personality traits may impact the way in which superiors andsubordinates interact.*Potential Independent Variable (IV): level of narcissism displayed by manager (low, high), gender of the manager,leadership style of the manager±It is important to understand the relationships between C-Suite managers in organizations because CEOs pressuringCFOs to meet targets or benchmark expectations is an important predictor of accounting manipulation.