What is it about?
Auditing financial statements is a public service that is conducted by private accounting firms. We argue that this current model creates dysfunctional commercial incentives. We designed an Audit Board model that is an expert in auditing and avoids many of the independence problems. Conversations with various stakeholders refined our thinking.
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Photo by Matt Ridley on Unsplash
Why is it important?
Regulators and investors have concerns about audit quality. In the current model, it is hard to observe audit quality and to differentiate between functional and dysfunctional incentives. Our rethinking of the status quo supports the debate about the future of auditing in the public interest.
Perspectives
I really enjoyed the conceptual rethinking of the current model of financial statement audits, the great discussions within the author team about a model that currently does not exist, and the inspiring conversations with a lot of various stakeholders about the pros and cons of the model that we designed. I hope this project leads to reflection and discussion on the structure of the auditing profession.
Dr. Herman Van Brenk
Nyenrode Business Universiteit
Read the Original
This page is a summary of: Auditing in the public interest: Reforming the profession by building on the strengths of the existing accounting firms, Critical Perspectives on Accounting, May 2020, Elsevier,
DOI: 10.1016/j.cpa.2020.102184.
You can read the full text:
Resources
You cannot serve two masters
Interview with Remko Renes, an assistant professor of corporate governance at Nyenrode Business University, to discuss the future of audit in the UK and Europe.
Why we must change the auditing profession now in order to benefit society
Press release about the Audit Board model as an alternative model of auditing in the public interest.
Contributors
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