Auditor Effectiveness in the United States and the United Kingdom: Comparison and Analysis
Posted: 6 Apr 2004
Date Written: January 6, 2004
Recent scandals have brought into question the validity of companies' financial statements and the negligence of auditors in gathering evidence to uncover questionable accounting practices. The public has grown aware of the auditor's role in examining company's financial statements. Investors trust in the veracity of a company's financial statements based on the auditor's report issued upon conclusion of the audit.
The purpose of this paper is to review the role of the public auditor and to demonstrate, citing recent cases, some of the problems that arise when the established principles of auditor independence and due diligence are compromised. We also explain the guidelines that auditors are supposed to follow in order to ensure that investors have adequate information. This study is not meant to imply that all auditors deviate from these guidelines but is intended to focus on situations wherein adherence to the guidelines was not the top priority.
Keywords: Auditor independence, auditor negligence, international
JEL Classification: M41, M49, M47
Suggested Citation: Suggested Citation