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Auditor Independence: A Comparative Descriptive Study of the UK, France and Italy
Author(s) -
Stevenson Joanna E.
Publication year - 2002
Publication title -
international journal of auditing
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.583
H-Index - 21
eISSN - 1099-1123
pISSN - 1090-6738
DOI - 10.1111/j.1099-1123.2002.tb00011.x
Subject(s) - auditor independence , independence (probability theory) , accounting , statutory law , audit , globalization , political science , commission , european union , external auditor , auditor's report , business , law , international trade , internal audit , joint audit , statistics , mathematics
The independence of the external auditor has long been a subject of great debate, particularly by UK and US interested parties. With the growth and globalisation of the large multi‐disciplinary firms, it has again been pushed to the fore: new ethical guidance issued by international bodies such as La Fédération des Experts‐ Comptables Européens (FEE) and The International Federation of Accountants (IFAC) and the activities of the Securities and Exchange Commission (SEC) and Independence Standards Board in the US have encouraged a wider consideration of the issue. In Europe, the European Commission has issued a Consultative Paper containing fundamental principles for adoption into Member States’ own regulation on statutory auditor independence. Increasing pressure for the removal of obstacles to a single European audit market have resulted in safeguards of auditor independence in some countries being described as undesirable barriers. This paper considers the issue of statutory auditor independence across three EU Member States: the UK, France and Italy, by comparing the ethical guides and the legal and professional regulations in place, highlighting and discussing areas of divergence, and contrasting them with the EC's Consultative Paper. It takes into account factors such as culture and the historical development of auditing in order to explore the differences found. The paper demonstrates that positions taken in France and Italy on the issue of auditor independence differ markedly from that taken by the UK profession. Of the three countries reviewed, the UK viewpoint has most obviously influenced the drafting of the EC Paper. The implications of these variances for EU harmonisation are discussed, and the paper concludes that there is a clear need for empirical study of this important issue in Europe to better understand the reasons for differing perceptions and attitudes, and the repercussions of these differences on the process of European audit harmonisation.