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Can Auditors Be Independent

Essay by   •  April 23, 2013  •  Essay  •  240 Words (1 Pages)  •  1,811 Views

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Can auditors be independent?

The article, "The Impossibility of Auditor Independence", introduce to us that investors seriously rely on auditor integrity. Audit firms face lawsuits from investors, paying judgments and settlements for their involvement in financial reporting process. AICPA requires that auditors should achieve a level of independence.

An audit is a very important evaluator of company he reviews and examines financial reports and his report is an important input for taking important decision, therefore, he needs to be ethical and independent so that company can take true and fair decision. However, there has been some discussion about the impossibility of auditor independence. In this article it indicated in no profession is impartiality more important than in auditing. At the same time, there are psychological factors affecting auditor independence. Psychological research shows it is unrealistic to have no bias in these institutional arrangements. For example, the company will hire external auditor to have a fairly present financial statement. To have a qualified audit report, management provides a reasonable assurance to external auditor. While an external auditor works with client closely, this is share different value information, to have an effort financial statement. Sometimes, auditor may want client offer more opportunity to increase his/her income. Then tendency will exist to avoid telling bad thing to each other. Hence, psychological is not helpful but affect the independence of auditors. Unfortunately the real auditor independence is hard to establish since psychological biases hard to change.

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