The purposes of this study were to examine the effects of six variables on auditor independence and the reliability of financial statements as perceived within the Irish commercial environment and to explore the reasons underlying these perceptions. The six variables comprised of audit firm size, audit market competition, audit committees, audit tenure, provision of nonaudit services (NAS) and client employment. From a combination of questionnaire and interview approaches, the study sought to obtain supportable and useful insight as to the perceptions held. The approach builds on and develops previous research conducted outside the Irish market. The results of the study showed that auditor independence and the reliability of financial statements were perceived to be significantly impaired when the audit was performed by a non-Big Six firm, the audit environment was highly competitive, no audit committee existed, audit tenure was long, NAS were provided by audit personnel to audit clients, and the auditor took up an employment position with a former audit client. Some of the reasons underlying these perceptions were as follows. The importance of reputation to, and. the international profile of, the Big Six firms allowed interviewees to have greater confidence in their independence. A highly competitive audit market was perceived to impair auditor independence by encouraging auditors to cut back on the amount of audit work performed in order to maintain audit fee income. Audit committees were perceived to enhance auditor independence by reducing the power that management could exert over the auditor. Long audit tenure was perceived to impair auditor independence by encouraging auditors to become cosy in their relationships with their clients. The lack of confidence as a result of NAS provision was associated with the audit firm's dependency on such services for fee income. Client employment was perceived to provide the ex-auditor with power to influence auditor-client relationships.

The purpose of this study is to provide empirical evidence relevant to perceptions of internal auditor independence. Specifically, this study investigates how the auditor practitioners (both internal and external auditors) perceive the importance of five selected factors that characterize the organizational settings of an internal audit department. Role theory is the frame of reference used to develop the conceptual model for this study in which the judgment of internal auditor independence is viewed as the role perception of internal auditors. A modified version of the Brunswik's lens model was developed to provide "paramorphic" representation of judgment of independence. The research methodology of this study is based upon a laboratory experiment in which a replicated factorial design was used to elicit the subjects' judgments of independence. The data collected from this experiment were analyzed by three statistical methods: conjoint measurement, multiple regression, and cluster analysis. The major findings follow. First, the five selected factors were not perceived as equally important by the subjects. In general, internal auditor's scope of audit. scope o^ service, and reporting level were perceived as more important than adequacy of organizational support. and formalization of audit policies. Second, the two groups of auditors disagree, significantly, on the relative importance of scope of internal audit service. Third, while large individual differences existed on the relative importance of the five selected factors, the degree of judgment consensus, in general, is high within each auditor group. Fourth, the internal auditor's perceived role conflict and role ambiguity were inversely related to his perceived level of professional autonomy. Finally, the internal auditors' judgments were not notably affected by the perceptions of their own organizational environment. However, as evidenced by the different types of experienced role conflict and ambiguity, the nature of these auditors' environment varied considerably, Given the above findings, the following implications are suggested: First, the organizational settings are critical of internal auditor independence. Improperly structured settings not only affect the perceived independence but also are detrimental to professional autonomy — de facto independence. Second, rule making bodies should provide more explicit guidelines concerning internal audit independence evaluation, particularly, in the area of scope of internal audit service. Third, while the auditor's reporting level is an important factor to independence, it should not be the only consideration. Other factors, such as the ones used in this study, should be also evaluated to avoid misleading results.

Because of recent corporate scandals, auditor independence and turnover have become the focus of much debate. For strengthening auditor independence , American government compulsorily stipulate that the firm has to replace its auditor every five years in Sarbanes-Oxley Act that was passed in 2002 to ensure that the increasing tenure can¡¦t lead to an bad audit quality. However, not every scholar all supports the Sarbanes-Oxley Act. In order to analyze these issues, we try to find out the relation between the length of auditor tenure and behavior of corporate income tax evasion and auditor independence by using game theory and bargaining model. Our main results are as follows. In our model, we suppose the auditor bargaining ability is positively related to tenure. Manager will gain lower benefits of tax evasion with increasing auditor bargaining ability, implying that increasing tenure reduces managerial collusion incentives. Finally, manager decides to report higher income. In contrast, auditor will gain higher benefits of tax evasion with increasing auditor bargaining ability. But for the auditor, the precondition of making company to be willing to collude with auditor is to possess the evidence of corporate income tax evasion. Because of that, auditor will increase the level of auditing efforts and choose to help company to make an incorrect attestation. So increasing tenure will influence auditor independence and audit quality.

An enquiry into the relevance and reliability of accounting information that is provided to natural shareholders in Australia. The findings provide evidence that the information needs of shareholders are not being met, and that the existing theory of auditor independence has not integrated the views of this large and significant group of shareholders.

An enquiry into the relevance and reliability of accounting information that is provided to natural shareholders in Australia. The findings provide evidence that the information needs of shareholders are not being met, and that the existing theory of auditor independence has not integrated the views of this large and significant group of shareholders.

The large accounting scandals in the early 21st century had large impact on the future discussion regarding the importance of auditor independence. This led to stricter auditor independence rules in Sweden as well as internationally. Small and medium-sized enterprises frequently hire their auditor for consulting services. A long and close audit-client relationship is common for small and medium sized enterprises. This is considered to be a threat towards the auditor independence. The purpose of this thesis is to examine whether Swedish small and medium sized enterprises, who are required to be audited, are aware of the auditor independence regulations. The thesis further aims analyze if the regulation of audit independence is as necessary for small companies as for large companies with additional number of shareholders. A qualitative study has been performed where data has been collected through 102 telephone interviews with small and medium-sized companies. A questionnaire consisting of both multiple choice and open questions has been used for the interviews. The collected data were compiled in SPSS which generated graphs and tables that then were analyzed. Small and medium-sized companies believe it is important that the auditor is independent towards their company. On the other hand, management in Swedish small and medium-sized enterprises has no direct knowledge of what the auditor independence regulation implies. / De stora redovisningsskandalerna i början av 2000-talet fick stor betydelse för den kommande diskussionen angående vikten av revisorns oberoende. Detta ledde till strängare regler för revisorerna i Sverige såväl som internationellt. Revisorn fungerar i många små och medelstora företag som en ekonomisk rådgivare. Små företag har ofta en lång och nära relation med sin revisor. Detta anses vara ett hot mot revisorns oberoende. Syftet med denna uppsats är att undersöka om revisionspliktiga små och medelstora företag är medvetna om reglerna gällande revisorns oberoende. Uppsatsen avser vidare att analysera om reglerna för revisorns oberoende är lika nödvändiga för små företag som för stora företag med en stor andel aktieägare. En kvalitativ undersökning har utförts där data från 102 telefonintervjuer med små och medelstora företag har samlats in. Ett frågeformulär med både flersvarsfrågor och öppna frågor har legat som grund för undersökningen. Den insamlade datan sammanställdes i SPSS vilket genererade grafer och tabeller som sedan analyserades. Små och medelstora företag anser att det är viktigt att revisorn är oberoende gentemot deras företag. Å andra sidan har ledningen i svenska små och medelstora företag ingen direkt kunskap om vad revisorns oberoende reglering innebär.

The thesis explores the relationship between Audit Committees and External Auditors’ fees of a sample of FTSE 350 companies in the UK for the period of 2005-2006. This is achieved by providing answers to three main research questions. First, what are the determinants of Audit Committee activity? Second, what is the relationship between Audit Committee activity and external auditors’ fees? Third, what is the relationship between audit and non-audit fees and how does the Audit Committee affect these? Starting out with an Agency Theoretical background, the study found evidence consistent with the views that a higher proportion of Independent Non-Executive Directors on the board enhances Audit Committees’ activity, but the presence of financial expertise on the committee was not found to be statistically significant in explaining its activity. The thesis also documented evidence that shows that Audit Committee activity is inversely related to managerial ownership of shares in companies. In line with the economic theory of auditing, the researcher used fees paid to the external auditor to proxy for the level of economic bonding between auditors and their clients. Higher fees are interpreted to indicate compromised independence. Five alternative measures of economic bonding were used. The researcher found a stable and statistically significant positive relationship between measures of economic bonding and Audit Committee activity. This finding is consistent with the view that Audit Committees buy more services from the auditors in order to enhance auditing and reporting quality. Strong positive relationships between audit and non-audit services and vice versa were found using a single equation fees model but these relationships were not consistent when the researcher controlled for endogeneity between audit and non audit fees using Simultaneous Equation Models (SEM). Audit Committee activity was not statistically important in these relationships. This evidence taken together supports the proposition that economies of scope exist in the joint provision of both audit and non-auditing services to the same client. Finally the thesis also documents evidence that suggests that knowledge spill-over flows from non-audit services to auditing services and that auditor do not use audit as a loss leader.

Accounting regulators are concerned about the potential threat of long-term auditor-client relationships on auditor independence, leading to lower audit quality. The main objective of this study is to examine the association between auditor tenure and an important feature of accounting, namely conservatism. Following Basu (1997) and Ball, Kothari and Robin (2000), I define conservatism as the quicker recognition in earnings of bad news about expected future cash flows. I investigate whether long-term auditor-client relationships are associated with less timely recognition of earnings to bad news, and a lower rate of reversal of negative earnings changes. The overall results strongly show that conservatism decreases as auditor tenure lengthens. The results are robust across various measures of conservatism and a series of sensitivity tests. However, auditors¡¯ litigation exposure appears to be able to mitigate the adverse impact of auditor tenure. In additional tests, I find that the reduced conservatism is not driven by the larger clients that auditors have incentives to retain. Moreover, I find that even industry specialists could not avoid the negative impact of longer auditor-client relationships on conservatism. The study provides some support to the regulators who are concerned about the potential negative impact of auditor tenure on audit quality and the rule of mandatory audit firm rotation.

It is important for an auditor to be independent both in mind and in appearance. The independence of the auditor is important for the trustworthiness of the auditor. Independence in appearance is the focus of this study and is how independent the auditor appears to be from the perspective of other stakeholders. This will be studied from the perspective of clients. The audit does not only have to be useful for the owners, but also for the client who pay for the audit. The aim of this study is to explain what factors that are affecting how clients perceive the auditor independence in Sweden. The study also wants to investigate if the client firm size affects the relationship between independence in appearance and factors affecting independence in appearance. To answer this, a questionnaire was sent via email to small and large limited companies in Sweden. This study found that audit tenure and auditor-client relationship partly have an influence on independence in appearance. How long the client has had the same audit firm is positively related to independence in appearance and how often the client has contact with the auditor is negatively related to independence in appearance. Client firm size couldn’t be used as a moderating variable since too few responses was received.

This dissertation investigates auditor independence by examining the effects of various factors on independence, both in fact and as perceived by several distinct groups. The first study examines the effects of auditing students' cognitive moral development and client risk on students' judgments related to an audit partner's acquiescence to client pressure in an earnings management scenario. The results indicate that students with higher levels of moral reasoning evaluated earnings management as less ethical and were also less likely to accept earnings management by an audit client. The results also indicate that subjects in a high client risk scenario evaluated earnings management as less ethical and were also less likely to accept earnings management by an audit client. Furthermore, this study investigated whether client risk moderates the effect of cognitive moral reasoning on ethical judgments and behavioral intentions. The results do not indicate an interaction. The second and third studies deal with potential consequences associated with the perceived impairment of auditor independence. Specifically, the second study deals with the effects of auditor-provided non-audit services on the client company's bond rating. If financial statement users believe that auditors providing non-audit services impairs the auditor's independence, they are likely to recognize an increase in information risk associated with such impairment (Johnstone et al. 2001). This could occur regardless of the true nature of the auditor's independence and would suggest a negative relationship between the amount of non-audit services purchased from the company's auditor and the company's bond rating. The results of this study support that contention. The third study investigates the effects of client importance and audit firm size on juror evaluations of auditor liability and damage awards. Previous research in accounting shows that client importance can affect sophisticated financial statement users' perceptions of auditor independence. However, no study has investigated perceptions of auditor independence in a litigation context. The results indicate that when an auditor is involved in litigation associated with an audit client that is financially more important to the auditor, jurors' evaluations of negligence are higher and they assess more in punitive damages. No effect of audit firm size on negligence ratings or damage awards is found. / Ph. D.