Big Four auditors

not allow for a company’s auditors to also provide tax services and still retain their independence. The SEC and the PCAOB have put restrictions on the nonaudit services that a company’s auditors can provide. These restrictions really limit the company’s auditors to the extent that if a firm provides auditing services for a company they cannot really provide any other types of services. This limitation was put into place in order to maintain the independence of auditors and the companies that they

audited by one of the Big Four” (Martin, 2006) which had a big impact on room for competition within the market. Also Familiarity within the ‘big four’ was another issue. Companies and their auditors are seen to be “too cosy” this can affect interest between parties and increase the risk of conflict of interest. It was also found that the aims of the reform was to give smaller and midsize audit firms a better chance at winning auditing job. Also aimed to “clarify the role of auditor, to reinforce their

mandatory auditor rotation in order to figure out the auditor independence issues, however the Competition Commission delayed the introduction of the new rule as it has a conflict with EU regulations. In fact, since the early 1970s, whether introduction of mandatory auditor rotation has sparked much debate. The favourer often used to vindicate mandatory auditor rotation rule is to enhance auditor independence, have a fresh view at the financial statement, boost the public’s perception of auditors’ independence

have found that auditor tenure has a negative correlation with financial restatement. I also found that industry expertise has a negative correlation with financial restatements. Further, it appears that firm size has no correlation with financial restatements. In conclusion, it turns out my

systematically across classes of audit firms (now Big 4 vs. non-Big 4) has been a very productive research hypothesis since early 1980’s: * audit quality = level of assurance (probability that financial statements are fairly stated when an unqualified opinion is given) * “product differentiation hypothesis”

financial audits are dominated by four major audit firms, which are known as the “Big 4” (PricewaterhouseCoopers, Ernst & Young, KPMG, and Deloitte). Prior studies suggest that these firms, on average, provide higher quality audit services and also exhibit a fee premium in comparison with their non-Big 4 audit firms; however, it is questionable that whether all these Big 4 audit firms are the same and that whether there are differences in audit quality within the Big 4. In term of total audit fee dollars

and that the public was demanding a degree of certainty in their audits that could not be achieved. This has historically been labeled the “expectations gap” They concluded that although auditors were not totally responsible for the scandals in 2000 and beyond, “all too many independent auditors lost their autonomy and judgment- and ended by blurring the line between right and wrong.” They described the audit as becoming a “commodity with little intrinsic value,” used to facilitate management’s

significant flaws were present with the old regulations regarding statutory reform. These issues created audited financial statements which investors were never fully confident with trusting, as well as creating many opportunities for the independence of auditors to be compromised. For this report, both group work for a presentation, as well as significant individual research went into finding the relevant content for a comprehensive report. Concluding this report it is evident that the new regulations

former Enron CFO Andrew Fastow). Duncan overruled Bass on the first memo and shortly after the second attempt where he questioned the CFO, Andrew Fastow and his role with the SPE’s was Duncan removed from the Enron account entirely. In any other of the Big 5 firms, Bass would have been able to overrule Duncan. However, this is a great example that stresses that AA’s objectives were

Enron, WorldCom, etc, the importance of auditor independence has been brought to the forefront of the accounting profession. The U.S. Public Company Accounting Oversight Board (PCAOB) has taken a strict stance on auditor independence, which signifies that an auditor cannot provide business advisory services without impeding their autonomy. However, an analysis of the current auditor-client relationship reveals contradictions to the interpretation of absolute auditor independence. In recent developments