Magazine article The CPA Journal

Is Auditor Independence Really the Solution?

Magazine article The CPA Journal

Is Auditor Independence Really the Solution?

Article excerpt

The worldwide interest in auditing following the scandals in the United States has been so great that not only are the regulatory developments in this country widely reported around the world, but so too are opinions and views on how to enhance the reputation of auditing. Thus, the August 2003 CPA Journal article "Accounting Profession, Heal Thyself: A Matter of Survival," by Ronald M. Mano, Matthew L. Mouritsen, and James G. Swearingen, three academics from Weber State University in Utah, was reported as a major news item in the London edition of the Financial Times. The views expressed in that article stimulated much comment in the United Kingdom and were widely discussed throughout the European accountancy profession.

As president of the Institute of Chartered Accountants in England and Wales (ICAEW) during the aftermath of Enron and WorldCom, I have thought deeply about these issues, and have debated them with many well-informed and experienced accountants, academics, businessmen, regulators, and politicians. Action was required, and has now been taken. But, as with any action, there is always the risk of unintended consequences, and many proposals that have been advocated on both sides of the Atlantic would be counterproductive. I am clear that, were the British authorities to incorporate the views expressed in The CPA Journal article into U.K. regulations, it would have a catastrophic impact on the quality of auditing in my country.

Much of the debate around the world has been about auditor independence, including the contribution from professors Mano, Mouritsen, and Swearingen. Auditor independence is important, of course, but it is not all-important. Auditor independence is but a means to an end. The United Kingdom takes this issue seriously and has stringent measures in place, based on some very well understood principles. But what really matters is the quality of the audit, which, above all else, is itself dependent on the quality of the people who conduct it.

In the United Kingdom, the ICAEW has, over many decades, been working to ensure that the highest-caliber people are attracted into the accounting profession, and that they receive the best possible training to equip them to be first-class auditors. U.K. auditing firms have been immensely successful in recruiting the best graduates from our country's best schools. This has been possible because the chartered accountancy qualification is traditionally seen as a first-class business education, leading to many different career opportunities. …

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