The article offers a logical assessment of independence as a principal component of the auditing career. The authors assert that although independence is a theatrically interesting concept, it has concrete issues which surround its implementation, checking and regulation. The article also analyzes the present auditor independence oversight and assesses the necessity of independence based on the perception of users and creators of information (Church et al., 2018). Further, the authors discuss essential implications and obstinate challenges which affect parties which participate in the process of accounting reporting. Lastly, the authors assess substitutes to the existing monitoring mechanism for controlling auditor independence.
In the article by Weber et al (2008), the authors explore the audit and audit market impacts related to an extensively exposed accounting scandal which involved a public firm (ComROAD AG) and a big, respectable audit company (KPMG) in Germany which has for a long time offered auditors with immense protection against the legal liability of shareholders. The authors use this case to investigate whether the reputation of an auditor helps in ensuring audit quality, which the current literature and reports provide limited backing. The authors use Germany for this study because the country does not have robust insurance foundation for audit quality, allowing a reasonably clean assessment of if the reputation of auditors is of importance (Weber et al., 2008). The results from the study support the reputation basis for the quality of audit. In general, based on the survey, auditor's reputation for the delivery of quality is very vital. If an audit firm has a bad reputation, it will likely lose most of its clients because they will lose trust and confidence in the auditor. The auditing profession is mainly founded on trust, and when trust is lost, customers will also be lost. This article differs from that of Church et al. (2018) in that it emphasizes on the importance of auditor's reputation, while Church et al. (2018) underscores the need for auditor independence.
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Lastly, in their article, Spalding and Lawrie (2019) discuss the new conceptual framework by AICPA. According to the authors, the AICPA, in a bid to promote best practices and ethical codes, it recently added a theoretical framework to its current code of professional conduct. The theoretical framework necessitates its supporters to deliberately create consciousness of critical risks to their submission to its codes of conduct and to create safety measure for offsetting or eliminating such risks. Consequently, all members are required to regard all questionable circumstances, situations, transactions or relationships by trying to perceive them through the lens of a fictional rational third party. Thus, the authors examine this code of behavior practically and theoretically. First, they set their analysis within the ethical concepts and principles which evaluate the professional moral principles of accountants. Then, they review the long-term rules-based strategy to the AICPA's Code. Further, the article explores the new theoretical framework with an outlook towards its potential for promoting a more principle-based method to the professional moral values of the accounting vocation. Also, the authors focus on the idea of the "reasonable and informed third party," which the AICPA has integrated into the new conceptual framework (Spalding and Lawrie, 2019). Lastly, the authors propose different ways through which the commitment of AICPA to the conceptual framework might be reinforced and improved. Overall, the authors of this article focus on the AICPA's new theoretical framework to ethical principles of the accounting profession as a whole, as opposed to the other two articles which focus on auditor as an accounting professional.
References
Church, B.K., Jenkins, J.G. and Stanley, J.D. (2018). Auditor Independence in the United States: Cornerstone of the Profession or Thorn in Our Side? Accounting Horizons 94(1), January, 71-99.
Spalding, A. D., & Lawrie, G. R. (2019). A critical examination of the AICPA’s new “conceptual framework” ethics protocol. Journal of Business Ethics , 155 (4), 1135-1152.
Weber, J., Willenborg, M., & Zhang, J. (2008). Does auditor reputation matter? The case of KPMG Germany and ComROAD AG. Journal of Accounting Research , 46 (4), 941-972.
