Perceptions of Respondents on Statutory Auditors’ Independence in Corporate Accounting Scandals: An Empirical Analysis

Abstract

This chapter identifies and discusses certain issues influencing statutory auditor independence in corporate accounting scandals based on a review of literature and legal case judgments. The opinions of informed and experienced respondents have been collected through a structured questionnaire and statistically analysed. The methodology is outlined in this chapter. It is observed that different categories of respondent have expressed concern and identified issues that erode statutory auditor independence. Such issues include laxity in the present regulatory environment, an unholy nexus created between statutory auditor and company management in the course of engagement, the process of appointing statutory auditors, uncontrolled remuneration and provisions of non-audit services to the audit client. However, there is wide disagreement on these identified factors among respondents from different occupational backgrounds. Based on their opinions on identified factors, two groups of respondents emerge: a smaller group comprising professional accountants believe that statutory auditor independence is mainly governed by internal environment and audit procedure, and a larger group comprising academics, students, corporate personnel and investors who sees the external environment as having considerable influence on the accountability of statutory auditors. The observations of these two distinct groups represent two completely different dimensions of factors that influence statutory auditor independence.