Publication Date

4-2024

School

School of Business

Major

Accounting

Keywords

Audit, Independence, Sarbanes-Oxley, Securities, Act

Disciplines

Accounting

Abstract

The goal of this paper is to analyze present research for the importance of independence to the auditing profession, determine the greatest threats to auditor independence today, the problems these threats have caused and to explore a possible solution to these problems. For many years, audit professionals have been considered the gatekeepers of the public market. Since the passing of the Securities Acts in the 1930’s, the structure of the privatized audit industry has made it incredibly difficult for auditors to remain independent from their clients. Client fees, the rise of non-audit services and the complexity of audit-client relationships pose serious threats to auditor independence today. Without significant changes to the audit requirements imposed by the SEC, these independence threats will continue to be pervasive in the industry as made evident by audit failures by the leading firms. O’Connor, Professor of law at University of Washington, has proposed a three-part solution to place the power of audit back in the hands of shareholders and restore public trust in the auditing profession. Auditors are an essential part of a healthy market in the United States. Thus, these issues should be considered of upmost importance. Until the power of audit is placed back in the hand of the people, an auditors ability to remain independent will continue to be called into question.

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