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According to Schneider and Rentsch (1988), as cited by Schwepker (2001), climate

refers to the ways organizations operationalize routine behaviors and the actions that are
expected, supported and rewarded inside the organization. It is like the weather inside an
organization; what employees perceive how things are done around the workplace. An
organization may have a range of a lot of different climates, one of which is ethical climate.
Ethical climate is defined as a subset of organizational work climate, which is best understood
as a group of prescriptive climates reflecting organizational procedures, policies, and practices
with moral consequences (Cullen & Martin, 2006).
A firms ethical climate is the basis of its values and behaviours expected therefrom
(Wimbush & Shepard, 1994). It was defined by Victor and Cullen (1988) as the prevailing
perceptions of typical organization practices and procedures that have ethical content
(Schweper, 2001). Another definition of ethical climate by Victor and Cullen (1988) as cited by
Huang, You and Tsai (2012), is that ethical climate is a type of organizational climate which
pertains to the climates reflecting organizational procedures, policies and practices.
Twenty five per cent out of 4000 respondents in a national survey believes that their
company tends to ignore ethical conduct just to meet business objectives while almost
seventeen per cent stated that theirs encourages misconduct to meet the same (Goodell, 1994).
Meanwhile, Hegarty and Sims believed that corporate goals and policy heavily influence
managers decisions to behave ethically or not.
Lack or no codes of ethics and principles are grounds for an unethical climate. Thus, it is
important to create an ethical climate within an organization. Ferrell and Skinner (1998) stated
that higher levels of ethical behavior were found in organizations where codes of ethics are
enforced. In addition to this, rewards and punishments also affect the decisions of an
organization indirectly depending on the consequences.

Further, Victor and Cullen (1988) developed nine moral climate dimensions which were
based on three criteria namely: egoism, benevolence, or principle and the level of analysis that
is individual, local, or cosmopolitan (Huang, You & Tsai, 2012). The three criteria and three
levels of analysis were cross tabulated and formed the moral climate types initially identified.
However, the five climate types found by Victor and Cullen from their primary work are
encountered more recurrently, hence, these five types provide the majority of the data available
for meta-analysis (Cullen & Martin, 2006). The five ethical climate types are called caring,
independence, instrumental, law and code, and rules.
Caring. This climate type 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.
Employees would have a sincere interest for the well-being of their co-employees, as well as
others within and outside of the organization, and who might be affected by their ethical
decisions in an environment which is controlled by a caring dimension of ethical climate. This
just shows that this ethical climate goes with the utilitarian dimension. The policies and practices
of the workgroup would foster concern for those affected by employees' decisions. Not only
would the policies and practices promote this, but most workgroup members would individually
conduct themselves in this manner (Shephard & Wimbush, 1994).
Independence. This climate type falls under the principle criterion. Individuals act according to
their own personal moral beliefs. 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. In considering their view of the organization, decisions with moral consequences
should accentuate personal moral beliefs with minimal regard for outside forces and external
inuence on ethical predicaments (Cullen & Martin, 2006). The individuals principles, upon

which decisions are made, are assumed to be determined through careful consideration and
understanding (e.g., Schminke et al., 2005; Watley, 2002).
Law and code. This climate type falls under the principle criterion. 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. Nowadays, people tend to make it obligatory for
individuals to look beyond the rules and practices of their organizations to also those of
professional associations for reminders concerning proper behavior (Shephard & Wimbush,
1994). Individuals who are members of a professional association would be apprehensive about
following professional codes of conduct in order not to jeopardize their membership in the said
professional association or lose the respect of their comrades. They would see to it that they are
abiding with the laws governed on their place of work.
Rules. This climate type falls under the principle criterion. This pertains to the rules of conduct
accepted by the firm. An organization characterized by the "rules" dimension of ethical climate
would be comprised of workers who adhere strictly to the organizational rules and policies.
Because of its deontological foundation, this climate requires commitment to rules and
principles. In this case, the rules would serve as a guide for employees' ethical decision-making
(Shephard & Wimbush, 1994).
Instrumental. This climate type falls under the egoism criterion. It 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). Furthermore, they perceive that self-interest
guides behavior, even to the potential detriment of others. One believes that decisions are made
that serve the organizations interests or provide personal benets (Wimbush and Shepard,

1994). Even when considered in a variety of contexts, studies consistently show that
instrumental climates are the least preferred (e.g., Cullen et al., 2003; Erondu et al., 2004;
Flannery and May, 2000).
One sector that constitutes the practice of accountancy is the practice in Commerce and
Industry or also known as the private practice. This shall constitute a person involved in
decision making requiring professional knowledge in the science of accounting, or when such
employment or position requires that the holder thereof must be a certified public accountant.
The private sector of the accounting profession primarily consists of management accountants,
corporate accountants, and internal auditors. Accountants employed in this practice typically
involve themselves in generating reports about the financial performance of the company in
order to assess its ability to generate funds for future use or whether to invest or not in a certain
venture. They also conduct audits within the company they belong in order to maintain the
reliability of the financial statements the management is going to present. Internal auditors in
particular, have the responsibility of ensuring the management that recorded transactions is
accurate to protect the integrity of the company. As the work in the private sector suggests,
accountants employed in this practice tend to work closely related with other people thus
removing the feeling of being isolated within the group (Moyes, D. & Shao, L.,2008).
Ethical work climate built in the private practice differs with that of the public practice in
several factors but it doesnt make one more ethical to the other. It simply explains that both
sectors have a different work climate and that their difference is not a factor to consider one
more ethical over the other. Generally, people in the private sector particularly managers, tend
to be more compliant to ethical standards and are more willing to compromise their
organizational goals to in line it to ethical principles uphold by the organization than those in the
public sector (Bowman, 1976). If the top management itself has little or no value for ethical
behavior, there would be an unfavorable ethical climate within the company that in turn causes

job dissatisfaction. (Omar, N. & Ahmad, Z.,2014) For example, in a company setting, there is an
internal auditor that safeguards recorded transactions and events to prevent the management in
committing fraud, but if the management itself doesnt value uprightness, then the internal
auditor itself would lose sight of the ethical behavior needed to execute his job therefore
producing an adverse ethical climate within the organization. If conflict of interest arises within
the company such as the principal agent problem, where the priority of the other is different as
to the agent, Sims and Kroeck (1994) expressed that it would result to a lack of ethical fit that
may result to distress and latter, de-motivation of employees. A negative relationship between
ethical climate and turnover intention exist. It means that if a company possesses a sound
ethical climate then most likely, fewer employees will decide to leave and look for other jobs that
would value moral principles. Management accountants would find it contradicting if the
company he belongs does unethical doings as oppose to his principle that would make him
choose to leave and look for other companies that will uphold his principles in life.
On the other hand, several factors may affect an employees level of job satisfaction;
some of these are salaries and benefits, working conditions, management style, and tasks
involved as well as challenges that the position of an employee hold (Moyes, D. & Shao,
L.,2008). Job satisfaction was defined by Locke (1969); Shaffer and Harrison (1998) as the
pleasurable emotional state resulting from the appraisal of ones job as achieving or facilitating
the achievement of ones job values. Job satisfaction may be both intrinsic and extrinsic.
Intrinsic job satisfaction is derived from internally mediated rewards such as the job itself and
opportunities for personal growth and accomplishment, and extrinsic job satisfaction which is
from externally mediated rewards such as satisfaction with pay, company policies and support,
supervision, fellow workers, chances for promotion, and customers (Walker et al., 1977).
Additionally, job satisfaction was explained as a contribution of cognitive and affective reactions
to the differential perceptions of what an employee wants to receive compared with what he or

she actually receives by Samad (2005). It refers to a context that is more restricted because it
focuses on the experiences and perceptions that are related to the individuals own work
(Bussing et al., 1999).
Job satisfaction refers to an individuals emotional orientation toward his or her work
(Huang, You & Tsai, 2012). For Vroom, it is the overall feeling of an employee about his or her
work. For Smith, it is the perception and overall response of a person to his or her work. For
Locke, it is the pleasurable emotional state resulting from the appraisal of ones job as
achieving or facilitating the achievement of ones job values. For Price, it is the employees
emotional attitude toward his or her job.
Smith and others conceptualized the five facets of job satisfaction which are satisfaction
with supervisors, satisfaction with co-workers, satisfaction with pay, satisfaction with promotion
and satisfaction with the work itself. Certain companies are likely to develop a higher salary
structure that would contribute to a more satisfied employee leading to contentment and
motivation for their work than those of the public accounting firms due to demand for services.
Management accountants are more likely to have clearer instructions from the management
regarding tasks to be done and accomplish because they are more concerned about a specific
matter concerning the company unlike the work of public accountants that are more rigid and
complex. In such manner, it contributes on how well private accountants perceive management
style as a factor on how satisfied they can be especially if the environment allows them to
partake in decision making in a more personal way. Work in the public practice of accounting
demands more time from its employees because of increasing demands in audit services
conducted to several companies compared to the responsibilities of accountants employed in
the private practice. According to previous studies, job satisfaction and turnover intentions are
inversely related. Explicitly stating, if an employee is not satisfied with his job, tendency is that
he will look for another job.

According to Walker et al. (1977), as cited by Schwepker (2001), job satisfaction may be
both intrinsic and extrinsic. It is intrinsic when it comes from internally mediated rewards such as
the self-growth and accomplishment. It is extrinsic when it comes from externally mediated
rewards such as satisfaction with pay and chances for promotion. Policies and supervision both
influence ethical climate and job satisfaction is determined by these two. Thus, ethical climate
might have a significant influence on job satisfaction.
When it comes to job satisfaction and organizational commitment, the prevailing ethical
climate can also be considered. Ethical climate can be narrowed down to five types which are
caring, independence, instrumental, law and code, and rules. These different types can have a
different influence to job satisfaction and organizational commitment (Ismael, 2015). The only
type that can affect it was the caring ethical climate. It was concluded that the higher the
perceived caring ethical climate type the organization have, the higher the possibility that the
auditor will stay in the organization.
Organizational commitment is commonly defined as the employees interest in and
connection to an organization (Huang, You & Tsai, 2012). When employees believe in the goals
and values of the firm they belong to, they are willing to remain within their organization and
exert extra effort on their behalf (Mowday et al., 1979). Therefore, when employees have
organizational commitment, they tend to act according to the interest of the organization (Porter
et al., 1974; Mowday & McDade, 1979).
There are several definitions of organizational commitment but there is a common theme
amongst them wherein the employees who are committed individual believe the organizational
goals and accepts the values of their organization and are willing to stay with their respective
institutions and provide considerable effort on their behalf. (Mowday et al., 1979). Hereafter,
organizational commitment will act as a psychological bond to the organization that influences

the workers to act in ways that are in line with the interests of the organization (Porter et al.,
1974; Mowday and McDade, 1979). In general, the organizational climate is resulting from the
aggregation of psychological climate measures of the employees that come from the same
organization that reects more precisely the organizations true climate. The aggregation will
counter-balance the idiosyncratic parts of individual employees psychological climate measures
(Hwang & Hsieh, 2011).
Meyer and Allen distinguished the three kinds of organizational commitment namely:
affective commitment, continuance commitment and normative commitment. Katz pointed out
three conditions that would make a firm operate efficiently. These are participating and staying
in the organization, acting according to the behavioral principles regulated by the organization
and automatic devotion to the organization.
Smith et al. later on categorized these three conditions as organizational citizenship
behavior (OCB). Williams and Anderson divided OCB into three dimensions namely IRBs,
OCBI and OCBO. IRBs are the responsibilities of the employees. OCBIs are the behaviours that
benefit specific individuals and indirectly contribute to the organization. Lastly, OCBOs are the
behaviors that benefit the organization in general.
Organizational commitment is the product of satisfied employees on their jobs. (Suliman,
2002; Bagozzi, 1980; Brown & Peterson, 1994; Reichers, 1985). With that premise,
organizational commitment has a positive relationship with job satisfaction.

Another set of

factors are considered in determining whether an employee particularly an accountant is

satisfied with his job. Some of these are sex, age, race, and educational levels (Moyes, D. &
Shao, L.,2008). Wright and Hamilton (1978) said age as factor on how committed an accountant
can be argued that older employees have more sense of commitment than the younger ones for
the reason that younger accountants are driven by a fast pace environment wherein they value

promotion and compensation. Younger generation accountants belong to the technology age
thats why they tend to be more adaptive to the change brought by new technologies than older
accountants making them able to use that potential and apply to other companies that may
provide higher compensation or convenience. This scenario holds true that organizational
commitment is higher with those of older accountants than the younger ones. Aldag and Brief
(1975) also expressed that older accountants hold more sense of meaningful work experience
compared to new breed of accountants. As to gender, 82% of male accountants are satisfied
with their jobs compared to just 57% of female accountants (Takhtaei, N. & Dezfully, L., 2013).
According to Parent, DeAngelis, and Myers, female accountants have appeared to face a
significant difficulty balancing their work as accountants and family responsibilities than male
accountants. Accountants in the private sector may lose commitment to work due to aspects
that might cause a conflict to their priorities most especially if it is family related. Females place
less emphasis on status, financial reward and position, and greater emphasis on achieving
personal goals and gaining recognition from others (Dann, 1995). Organizational commitment
and turnover intention has an inverse relationship. The more committed an employee is to his
work the lower the turnover intention.
Intention to leave often appears to be the immediate precursor to actually quiting
(Schwepker, 2001) and it is common endorsed as a predictor of turnover (Mobley, 1982).
According to Apasu (1986), the greater the congruence between individual and organizational
values, the lower the turnover intention. Individuals who believe they do not fit in the
organization they belong to usually do not stay for long (Apasu, 1986). Thus, individuals who
desire an ethical climate should be less likely to leave an organization which has an ethical
Those who graduated in the program of Bachelor of Science in Accountancy can also
work as auditors in different firms. Auditors job can be strenuous especially during the audit

season which is one of the reasons of a high turnover rate in the auditing profession. In order to
identify and deeply understand the nature of how auditors work, there had been many previous
studies which discussed the ethical climate, job satisfaction, organization commitment and
turnover intention of auditors in the public accounting firm.
According to a study of Jannah, Baridwan and Hariadi (2016), turnover intention of
auditors can be influenced by role conflict and organizational commitment. Organizational
commitment can then be measured by their affective and continuance commitment (Karavardar,
2014). The researchers also added that turnover intention cannot be influenced by job
satisfaction, role performance and role ambiguity. Auditors, especially those that are first time
employees dont really care on whether they are enjoying their jobs because all they want is to
have an experience on auditing. Most auditors care more about how their job and work load fit
them well and not about the financial rewards and the salary that they are going to get in their
firms (Pradana & Salehudin, 2015). Once the auditors feel that they cant carry their jobs
anymore, there is a big possibility that they are going to find a new firms to work in. Aside from
that, they are also willing to stay in the organization if they are getting what they need and had
already established an emotional attachment inside the organization. Good corporate
governance and management can keep their auditors from leaving the organization because of
a more peaceful and conflict-free environment which most of the auditors want.
Generally, high levels of organizational commitment could lead to higher performance,
greater satisfaction and lower turnover (Mathieu & Zajac, 1990). Climate accounts for twenty
one per cent of the variance in teachers commitment to their organizations. Likewise, marketing
professionals are examined and ethical values were found to be significant predictors of
organizational commitment. In the sales force, the more that salespeople perceive their
organizations climate as ethical, the higher their reported levels of job satisfaction. Another
thing is that mostly female hospital employees were found to be more committed to their

organization when their preferred ethical work climate and their actual ethical work climate
match (Sims & Kroeck, 1994).
There are also other factors that can influence the turnover intention of auditors. As cited
by Ahmad and Ohmar (2014), the turnover intention in the auditing firms is known to be high
due to the high level of voluntary turnover among professional auditors who wanted to
experience working in other firms. (Rhode et al., 1977; Ferris, 1981; Bullen & Flamholtz,
1985). In order to overcome these negative consequences of turnover intention, the factors that
can influence it must be studied. Pradana et. al (2015) analyzed how work overload influences
turnover intentions of newly hired junior auditors in public accounting firms and the mediating
variables used were job satisfaction, work related stress and work life conflicts. In contrast to
what was stated above which stated that turnover intention cannot be influenced by job
satisfaction, the study showed that job satisfaction is inversely related with turnover intention,
which means that as job satisfaction of the employees increase, their turnover intention
decrease. It was also supported by the study of Muliawan, Green & Robb (2009) which argued
that job satisfaction has positive relationships with organizational commitment and both have
direct negative effects on the turnover intentions of auditors. Folami & Bline (2012) also stated
that auditors must be satisfied with their jobs because it is the antecedent to the employees
intent to leave the firm. Ahmad & Ohmar (2014) agreed that both job satisfaction and
organizational commitment were both significant factors that can influence the turnover
intentions of auditors. It was also implied that job satisfaction had an effect on organizational
commitment. The researches however added ethical climate in their study because it is about
the relationship of ethical climate, job satisfaction, organizational commitment and turnover of
external auditors in Malaysia. The instrument in this study will be replicated by the researchers
as it is similar to what the researchers want to study in Philippine setting. The study stated that

ethical climate is directly linked with job satisfaction however is inversely related with the
auditors turnover intention.
In additional to that, it is also discussed that only work related stress such as being
emotionally drained, frustrated with their work, having destructive tendency, feeling of being
hopeless, burned out, being angry and depressed most of the time and being bored with their
work can mediate the influence of work overload on the turnover tendencies of junior auditors.
On the contrary, 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 (Pradana et. al, 2015).
On the other hand, job stress can be a factor in studying job satisfaction and
organizational commitment (Masihabadi, Rajaei, Koloukhi & Parsia, 2015). A total of 200
questionnaires were distributed to auditors but only 170 questionnaires were useful. In this
study, it was concluded that job stress had a negative effect on both organization commitment
and job satisfaction and there was not a negative connection between job stress and job
performance. Job stress have a negative effect on job satisfaction, however, it wasnt confirmed
whether job stress can affect job performance negatively or not.
There are also previous studies that are related to healthcare internal auditors and
systems information auditors. Employees emotional attachment, as one of the types of
organizational commitment, is the only type that has an influence in the turnover intention of
healthcare internal auditors (Sow, 2015). This only means that these auditors value the
relationships that they have within the organization and they want the feeling of being linked and
connected with their colleagues. For the healthcare internal auditors to stay in the organization,
the most important variable for them to stay in the organization is to have the feeling of

belongingness (Balassiano & Salles, 2012). When it comes to information systems auditors, role
conflict, satisfaction with pay and fulfilment of growth needs are the main factors that affect their
turnover intentions. (Muliawan et. al, 2009). The researchers also added that personal growth
and development within the organization is also important to the auditors and fulfilling this will
make them stay in the organization.