Auditor Independence in the United States: Cornerstone of the Profession or Thorn in Our Side?

2018 ◽  
Vol 32 (3) ◽  
pp. 145-168 ◽  
Author(s):  
Bryan K. Church ◽  
J. Gregory Jenkins ◽  
Jonathan D. Stanley
Keyword(s):  
United States ◽  
Financial Reporting ◽  
The United States ◽  
Auditor Independence ◽  
Audit Committees ◽  
Systematic Evaluation ◽  
Client Relationships ◽  
Reporting Process ◽  
Regulatory Approach

SYNOPSIS The objective of this paper is to provide a systematic evaluation of independence as a foundational element of the auditing profession. We maintain that while independence is a theoretically appealing construct, it is fraught with practical problems surrounding its implementation, monitoring, and regulation. We analyze the current oversight of auditor independence and evaluate the need for auditor independence from the perspective of information users and information producers. In the process, we discuss important implications and intractable challenges that affect one or more parties involved in the financial-reporting process. Finally, we carefully evaluate alternatives to the current regulatory approach for managing auditor independence (i.e., proscribing various auditor-client relationships). We conclude that increasing audit committees' responsibilities for monitoring the auditor's independence—along with additional disclosure about threats and safeguards to auditor independence—is worthy of further consideration and debate as a path toward addressing the auditor independence conundrum.

scholarly journals A Current Evaluation of Independence as a Foundational Element of the Auditing Profession in the United States

2019 ◽  
Vol 13 (1) ◽  
pp. P17-P27
Author(s):  
J. Gregory Jenkins ◽  
Jonathan D. Stanley
Keyword(s):  
United States ◽  
Financial Reporting ◽  
The United States ◽  
Auditor Independence ◽  
Audit Committees ◽  
Client Relationships ◽  
Reporting Process ◽  
Regulatory Approach ◽  
A Current ◽  
The U.S

SUMMARY This paper summarizes '“Auditor Independence in the United States: Cornerstone of the Profession or Thorn in Our Side?”' (Church, Jenkins, and Stanley 2018). Their paper maintains that while the concept of independence is theoretically appealing, it is fraught with practical problems. Church et al. (2018) analyze the current oversight of auditor independence in the U.S. and the need for auditor independence from the perspective of various parties involved in the financial reporting process. In doing so, the paper discusses implications and challenges affecting one or more of these parties. Finally, Church et al. (2018) evaluate alternatives to the current regulatory approach of prohibiting various auditor client relationships to manage auditor independence. The paper concludes that increasing audit committees' responsibilities for monitoring auditor independence, along with additional disclosure about threats and safeguards to auditor independence, is worthy of further discussion and debate as a path toward addressing the auditor independence conundrum.

THE INCEPTION AND EVOLUTION OF FINANCIAL REPORTING IN THE PROTESTANT EPISCOPAL CHURCH IN THE UNITED STATES OF AMERICA

1986 ◽  
Vol 13 (2) ◽  
pp. 55-63 ◽  
Author(s):  
G. A. Swanson ◽  
John C. Gardner
Keyword(s):  
United States ◽  
Financial Reporting ◽  
United States Of America ◽  
The United States ◽  
Episcopal Church ◽  
For Profit ◽  
Not For Profit ◽  
The Church

This research documents the emergence of accounting procedures and concepts in a centrally controlled not-for-profit organization during a period of change and consolidation. The evolution of accounting as prescribed by the General Canons is identified and its implementation throughout the church conferences is examined.

Financial accounting scandals and the reform of corporate governance in the United States and in Italy

2017 ◽  
Vol 17 (1) ◽  
pp. 77-88 ◽  
Author(s):  
Daniel P. Sorensen ◽  
Scott E. Miller
Keyword(s):  
United States ◽  
Corporate Governance ◽  
Financial Reporting ◽  
The United States ◽  
Class Action ◽  
Financial Accounting ◽  
Private Enforcement ◽  
Content Type ◽  
Accounting Scandals ◽  
The Usa

Purpose In the 1990s and beginning of the next decade, a series of financial accounting scandals occurred in the United States (USA or US) and in several other countries of the world. The USA and Italy (among others) responded with legislation to reform financial reporting and corporate governance in these jurisdictions. This paper aims to compare the regulatory response of Italy to that of the USA. Design/methodology/approach This paper includes a review of relevant literature and evaluation of the actions of the regulatory authorities. Findings In the case of the financial reporting crises, the rapid response put the USA into the role of the “first mover” with the European Union (EU) reacting to US initiatives and eventually converging to a large degree with the provisions of the US legislation. Italy has adopted many of the same regulatory reforms as the USA and has added some reforms that are directed to the specific needs to Italy. Research limitations/implications In conjunction with legislative initiatives like Sarbanes-Oxley, private enforcement mechanisms, such as shareholder class action suits in the USA, play an important role in discouraging and punishing financial accounting fraud. Practical implications In the absence of significant reforms of the Italian private enforcement system, corporate governance abuses and the potential for accounting scandals may still be persistent. As a whole, cooperative efforts continue between the USA and the EU. Such efforts are needed more and more, as companies become increasingly globalized. Originality/value This paper provides comparison and evaluation of corporate governance reform efforts in the USA and Italy.

The role of agency costs in the voluntary adoption of XBRL-based financial reporting

2020 ◽  
Vol 16 (5) ◽  
pp. 599-622
Author(s):  
Mehdi Khedmati ◽  
Farshid Navissi ◽  
Mohammed Aminu Sualihu ◽  
Zakiya Tofik-Abu
Keyword(s):  
United States ◽  
Financial Reporting ◽  
Agency Costs ◽  
The United States ◽  
Matched Pair ◽  
Alternative Measure ◽  
Content Type ◽  
Using Data ◽  
Voluntary Adoption

PurposeThe purpose of this paper is to examine whether and how firm's agency costs played a role in the voluntary adoption of the eXtensible Business Reporting Language (XBRL) under the SEC's voluntary filing program (VFP) that encouraged the voluntary adoption of the XBRL.Design/methodology/approachThis study employs a logistics regression and a sample of 140 firms that voluntarily participated in the VFP during its entire existence in the United States, and 140 matched-pair counterparts that did not voluntarily adopt the XBRL to investigate the role of agency costs in the voluntary adoption of XBRL-based financial reporting.FindingsWe find evidence consistent with the conjecture that a firm's low magnitude of agency costs plays a significant motivating role in the voluntary adoption of XBRL-based financial reporting. Our results continue to hold after using an alternative measure of agency costs and conducting two-stage least squares regressions. Supplementing these results, the study also shows that the level of agency costs of voluntary XBRL adopters remains statistically unchanged after the adoption while the level of agency costs associated with the firms that did not participate in SEC's VFP significantly decline after the adoption during the XBRL mandate.Practical implicationsThe findings of this study suggest that based on a firm's level of agency costs, regulators and policymakers, especially those in countries that are yet to mandate XBRL reporting, can, in advance, identify firms that are more likely to comply with their new financial reporting initiatives.Originality/valueThis paper provides first evidence on the role of agency costs in the voluntary adoption of XBRL using data from the United States.

Systematic Evaluation of Industrial, Commercial, and Institutional Food Waste Management Strategies in the United States

2016 ◽  
Vol 50 (16) ◽  
pp. 8444-8452 ◽  
Author(s):  
Keith L. Hodge ◽  
James W. Levis ◽  
Joseph F. DeCarolis ◽  
Morton A. Barlaz
Keyword(s):  
United States ◽  
Waste Management ◽  
Food Waste ◽  
Management Strategies ◽  
The United States ◽  
Systematic Evaluation
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