Auditor iIndependence and the expectations gap : some evidence of changing user perceptions

Beattie, Vivien and Brandt, Richard and Fearnley, Stella (1998) Auditor iIndependence and the expectations gap : some evidence of changing user perceptions. Journal of Financial Regulation and Compliance, 6 (2). pp. 159-170. ISSN 1358-1988

Abstract

The audit function is an essential part of the regulatory structure which supports the integrity of our capital markets. There is a recognised expectations gap which surrounds the audit function, as many users of audited financial statements have different expectations of the audit function from what it delivers. Perceptions of auditor independence are a fundamental part of this expectations gap. In the light of recent significant changes to the regulatory framework, this paper reports a survey of leading financial journalists, to ascertain their current views on auditor independence. Findings show a belief that some of the changes have reduced the expectations gap although problems still exist in the area of non-audit services. However, the most significant threat to independence is seen to be the economic and personal pressure on the partner as an individual, an area difficult to regulate. The challenge for audit firms is to demonstrate how well they control for this within their management structures.