Auditor independence can be described as an effective environment that enables a private auditor to focus on auditing with integrity and an independent approach. The concept of auditor independence is primarily founded on the need to have a transparent audit that is carried out in an independent manner (Tribunella & Tribunella, 2011). Auditor independence is directly linked to the facilitation of international capital flows. This is an implication that auditor policies should be followed effectively to maintain the confidence of the public. The public perspective is essential in shaping the outcomes of any audit since they play a massive role in using the audit report. Therefore, an independent audit should maintain a fair view during the whole audit process.
Auditor independence is significant in the international market by encompassing a global code of ethics. This means that the audit process should incorporate the public interest to ensure that the final audit report is accurate and contains valuable information to be used. The significance of auditor independence is based on the role it plays in influencing capital flows. The public and other investors allocate their resources in international markets based on the financial data that they receive from independent auditors (Kabejah et al., 2012). Thus, the public may negatively view biased information from an independent auditor, impacting on their choice of investment. This significantly reveals how auditor independence is required both at local and international levels.
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The success of the economy primarily depends on the confidence of the public and private investors about a particular capital market. The certainty in the provided information positively influences the public to make informed decisions about where to invest their resources. This, in return, facilitates international capital flows. This is a sign that auditor independence is directly related to international capital flows by relying on the perspective of the public interest.
References
Kabejah, M. A., Al Shanti, M. A., Dahmash, N. F., & Hardan, S. A. (2012). The informational content of auditor’s report and its impact on making decisions from lenders and management’s view in the Jordanian industrial, public firms. International Journal of Humanities and Social Science, 2 (14), 93-103.
Tribunella, T. J., & Tribunella, R. H. (2011). The effect of auditor independence on international capital markets for eCommerce firms. Journal of Business and Economic Research, 1 (2), 49-60.
