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Title: Investigation into UK shareholders' views of the threats to auditors' independence
Author: Dart, Eleanor Margaret Carston
ISNI:       0000 0004 2750 7960
Awarding Body: Cardiff University
Current Institution: Cardiff University
Date of Award: 2007
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The collapse of Enron sparked interest in auditor independence issues and caused much controversy over how best to prevent future accounting scandals. Through an agency theory framework, this research examines whether the primary users of UK audited financial statements have confidence in auditor independence. Four auditor-client relationships identified in the literature as potentially independence-impairing were examined these were economic dependence, non-audit service provision, long tenure and ex-auditor employment. These relationships were also highlighted in the Auditing Practices Board's Ethical Standards for Auditors (2004). Postal questionnaires were employed to investigate investor perceptions of the four auditor-client relationships and perceptions of safeguards for auditor independence. The current study is the only UK study to compare institutional and private investor perceptions on these issues. Descriptive statistics revealed that both groups of investors perceived economic dependence and the provision of non-audit services as potentially independence-impairing. However, investors appeared relatively unconcerned about ex-auditor employment and long tenure. Furthermore, the investors did not appear to be in favour of further regulations. Parametric and non-parametric tests were employed to determine whether background variables, such as accounting education, had an effect on perceptions of auditor independence. The results showed that the private investors without accounting qualifications were generally more concerned about the independence-impairing nature of the relationships than those with accounting qualifications and those institutional investors who were themselves ex-auditors employed by their former client company were the ones least concerned that ex-auditor employment could impair auditor independence. Whilst the current research was a response to recent accounting scandals, a review of the literature highlighted concerns for auditor independence dating back over 40 years. Academics and the accounting profession have yet to agree on how best to prevent future losses of independence. It appears that in the modern business environment, issues of auditor independence will remain a point of controversy.
Supervisor: Not available Sponsor: Not available
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID:  DOI: Not available