UK Shareholders’ Views of the Threats to Auditors’ Independence

Eleanor Margaret Dart, Cardiff University
Roy Chandler, Cardiff University

ABSTRACT. Independence has been of fundamental importance to audit practice since the 19th century. However, recent accounting scandals have increased public disquiet about auditors’ ability to comply with this service ideal.

This paper focuses on the perceptions of UK private and institutional shareholders of four potentially independence-impairing auditor-client relationships.

Results suggest that economic dependence and non-audit service provision were perceived as the biggest threats to auditor independence. Statistical analyses showed that private investors without accounting qualifications were more worried about such issues.Institutional investors expressed satisfaction with current safeguards for auditor independence.

These results inform the current debate on this most fundamental of audit qualities and provide an original comparison of UK private and institutional investor perceptions.

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