Conflicts of interest and the case of auditor independence: Moral seduction and strategic issue cycling

Article Abstract:

Two-tiered analysis using moral seduction theory and issue cycle theory is conducted to understand the conflict of interest, which led to the failure of the US auditing system to deliver true independence. Two alternatives are suggested increase government regulation over auditor-client relationship and compel firms to buy financial statement insurance rather than submitting regular financial audits, and conclude that radical reorganization of the industry and basic structural reform are essential to achieve auditor independence.

Business Ethics, Models, Analysis

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Reports of solving the conflicts of interest in auditing are highly exaggerated

Article Abstract:

Nelson's careful approach to introduce incremental changes and cost-benefit analysis before implementing any reform to the existing auditing system is criticized as it destroyed the independence of audits for the financial benefits of the auditors. It is suggested that auditing profession should introduce major changes to provide independent audits, as the risk of doing nothing is greater than the risk associated with the reform.

Cost benefit analysis

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Ameliorating conflicts of interest in auditing: Effects of recent reforms on auditors and their clients

Article Abstract:

Evaluation of the auditing reforms by Moore and others concludes that reforms are misguided and insufficient. Critics of Moore argue that the reforms reduce the likelihood of audit failure by affecting the actions and incentives of auditors and audit clients and calls for future research to study the intended and unintended effects of reforms before enacting any new laws.

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