Get 20M+ Full-Text Papers For Less Than $1.50/day. Start a 14-Day Trial for You or Your Team.

Learn More →

Measuring the independence of audit oversight entities: a comparative empirical analysis

Measuring the independence of audit oversight entities: a comparative empirical analysis PurposeIndependent audit oversight is a prerequisite for restoring public confidence in financial reporting and auditing after the past accounting scandals and the financial crisis. By analysing and comparing the independence of the audit oversight boards of 27 European Member States and the USA, this study aims to provide insights into the question of how independent “independent” audit oversight boards are.Design/methodology/approachIndependence is measured in terms of the organisational compositions and regulatory competences of the audit oversight authorities. The data were collected through an e-mail questionnaire that was sent to all European oversight authorities, and by analysing legal provisions of various regulators. The results are analysed and visualised by a Partial Order Scalogram Analysis with Coordinates, which allows conclusions about the similarities of various systems and their relative levels of independence. Both measurements are then equally combined into one value of material independence, which is used to rank the oversight authorities.FindingsAlthough all countries encounter similar pressures to establish profession-independent oversight systems, this study identifies how differently “independence” has been translated in regulatory outcomes. While all countries claim to possess formal independent oversight bodies, there is a visible gap between countries with comparatively strong independent oversight authorities and systems in which accounting bodies still maintain far-reaching regulatory influence. At the same time, the results question the role of the Public Company Accounting Oversight Board (PCAOB) as the globally perceived benchmark of an entirely independent regulator.Research limitations/implicationsThis study focuses on formal independence rather than de-facto independence. Future research has, therefore, to address how these formal arrangements have evolved in regulatory practice.Practical implicationsPolicy makers around the world perceive independent oversight as one of the essential elements of regulatory reforms aiming at restoring public confidence in the aftermath of past accounting scandals. This study enables the comparison and benchmarking of national specific regulatory designs with other forms of independent oversight.Originality/valueAlthough the role of independent regulation is a recurring theme in accounting research, a systematic and encompassing comparison of the intertwining of audit oversight authorities and the accounting profession has not yet been provided. This study takes a first step towards providing a quantifiable measure of the formal independence of audit oversight authorities by mobilizing concepts, methods and prior findings from the field of public policy research. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Accounting Research Journal Emerald Publishing

Measuring the independence of audit oversight entities: a comparative empirical analysis

Loehlein, Lukas
Accounting Research Journal , Volume 30 (2): 20 – Jul 3, 2017
Download PDF
20 pages

Loading next page...
 
/lp/emerald-publishing/measuring-the-independence-of-audit-oversight-entities-a-comparative-CVpPzkXi3f

References (48)

Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
1030-9616
DOI
10.1108/ARJ-05-2015-0071
Publisher site
See Article on Publisher Site

Abstract

PurposeIndependent audit oversight is a prerequisite for restoring public confidence in financial reporting and auditing after the past accounting scandals and the financial crisis. By analysing and comparing the independence of the audit oversight boards of 27 European Member States and the USA, this study aims to provide insights into the question of how independent “independent” audit oversight boards are.Design/methodology/approachIndependence is measured in terms of the organisational compositions and regulatory competences of the audit oversight authorities. The data were collected through an e-mail questionnaire that was sent to all European oversight authorities, and by analysing legal provisions of various regulators. The results are analysed and visualised by a Partial Order Scalogram Analysis with Coordinates, which allows conclusions about the similarities of various systems and their relative levels of independence. Both measurements are then equally combined into one value of material independence, which is used to rank the oversight authorities.FindingsAlthough all countries encounter similar pressures to establish profession-independent oversight systems, this study identifies how differently “independence” has been translated in regulatory outcomes. While all countries claim to possess formal independent oversight bodies, there is a visible gap between countries with comparatively strong independent oversight authorities and systems in which accounting bodies still maintain far-reaching regulatory influence. At the same time, the results question the role of the Public Company Accounting Oversight Board (PCAOB) as the globally perceived benchmark of an entirely independent regulator.Research limitations/implicationsThis study focuses on formal independence rather than de-facto independence. Future research has, therefore, to address how these formal arrangements have evolved in regulatory practice.Practical implicationsPolicy makers around the world perceive independent oversight as one of the essential elements of regulatory reforms aiming at restoring public confidence in the aftermath of past accounting scandals. This study enables the comparison and benchmarking of national specific regulatory designs with other forms of independent oversight.Originality/valueAlthough the role of independent regulation is a recurring theme in accounting research, a systematic and encompassing comparison of the intertwining of audit oversight authorities and the accounting profession has not yet been provided. This study takes a first step towards providing a quantifiable measure of the formal independence of audit oversight authorities by mobilizing concepts, methods and prior findings from the field of public policy research.

Journal

Accounting Research Journal – Emerald Publishing

Published: Jul 3, 2017

There are no references for this article.