Accountant Independence Essay example

767 Words4 Pages
What exactly is accountant independence? I have determined that accountant independence is very similar to being an independent auditor. When it comes to auditor independence, it refers to the independence of the internal auditor or the external auditor from parties that may have a financial interest in the business being audited. The initial concept of auditor independence was developed in the 19th century, which primarily originated with the British. In that era, British investors didn’t allow auditors to work in the businesses that they audited. The initial concept began to change in the early 20th century due to the shift in capital from foreign to domestic sources in the railroad, mining industries and the inventions of the telegraph…show more content…
This then represents the minimum amount of work that the reader can expect the auditor to perform. However, all auditors are individuals with different attitudes to risk and return and so one auditor’s minimum standard of audit work will not necessarily be that of a colleague.” For his argument to be effective the auditors would have to have complete compliance with the principles of auditor independence. Accounting firms started to adjust their objectives and neutral focus for their clients with regard to accounting and auditing matters. Businesses and corporations took advantage of this but in the end cost their company a fortune. Enron is the first thing that comes to mind when it comes to a company losing a fortune due to misleading financial accounts. Enron was an American energy, commodities and services that was one of the world’s leading electricity, natural gas, communications and paper companies. They were named “America’s Most Innovative Company”, according to Fortune for six consecutive years. Enron’s auditor firm, Arthur Andersen, was accused of applying reckless standards in its audits because of a conflict of interest over the significant consulting fees generated by Enron. As a firm, their methods were reviewed in order to see why Andersen received so much money in audit fees from Enron. In this
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