Building a Better Audit Profession: Align Incentives and Reduce Regulation
Posted: 1 Jul 2013
Date Written: June 1, 2007
The article discusses the conflict of interest in auditing. The author relates that all publicly traded companies are required by law to hire a licensed auditor. It weakens the product market discipline that normally exists in the economy. In addition, the company gets to choose and pay its own auditor. It then creates the potential for a conflict of interest where the auditor might collude with management rather than serve the public interest.
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