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Objectivity and Independence: The Dual Roles of External Auditors and Forensic Accountants

Journal of Forensic and Investigative Accounting, Volume 6 Issue 2 July - December 2014

28 Pages Posted: 12 Mar 2013 Last revised: 16 Jun 2015

James A. DiGabriele

Montclair State University

Marianne Ojo

George Mason University; American Accounting Association

Date Written: March 11, 2013

Abstract

This paper is aimed at illustrating that certain capacities exist whereby the dual role of the external auditor (in undertaking internal audit roles as well as skilled persons roles) could be exercised to the optimal and maximum benefit of an entity or organisation. It also aims to accentuate on why a return to and focus on traditional auditing techniques, as well as auditing techniques which focus on internal controls is a much needed move. In so doing, it contributes to the extant literature by highlighting why such a move should be facilitated, as well as proposing means whereby such a move would be facilitated - namely, through a focus on benefits which could be derived where the external auditor is able to incorporate certain internal audit responsibilities. The paper also draws attention to safeguards which require due consideration if the ever important attributes of objectivity and independence are not to be compromised. Risks associated with the overlapping roles of testifying and consulting experts in Forensic Accounting will also be considered in this paper.

Whilst the benefits and potentials of the dual roles assumed by external auditors are emphasized, as well as the need to ensure that safeguards operating to guard against a compromise of objectivity and independence are in place, authors' opinions in support of dual roles also take into consideration the utmost priority of ethical values. The paper hence also highlights the fact that such dual roles are appropriate in certain cases – as illustrated by justifications for limitations imposed by the Sarbanes Oxley Act and other relevant and applicable legislation – even though instances also persist where section 201 of Sarbanes-Oxley, with regard to internal audit outsourcing, may have been over-reactionary and may continue to hinder both companies and their auditors.

Keywords: independence, objectivity, Sarbanes Oxley Act, FSMA section 166, ISA 610, Amended Rule 26 (Federal Rules of Civil Procedure Rule 26)

Suggested Citation

DiGabriele, James A. and Ojo, Marianne, Objectivity and Independence: The Dual Roles of External Auditors and Forensic Accountants (March 11, 2013). Journal of Forensic and Investigative Accounting, Volume 6 Issue 2 July - December 2014. Available at SSRN: https://ssrn.com/abstract=2231524 or http://dx.doi.org/10.2139/ssrn.2231524

James A. DiGabriele

Montclair State University ( email )

Upper Montclair, NJ 07043
United States
973 655 7288 (Phone)

Marianne Ojo (Contact Author)

George Mason University ( email )

4400 University Drive
Fairfax, VA 22030
United States

American Accounting Association

5717 Bessie Drive
Sarasota, FL 34233-2399
United States

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