Who Needs Facts When You Have Common Sense? Thoughts on the SEC’s Proposal on Auditor Independence
- Topics:
- Audits
- Source:
- The CPA Journal
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Overview: Last year, SEC Chief Accountant Lynn Turner sent the American Accounting Association (AAA) a letter suggesting various areas for research on auditing and other issues, including whether users of financial statements consider non-audit services to impair independence, and how disclosure of all non-audit services would affect investors’ perceptions regarding independence. To justify the need for this disclosure, the SEC said it has “become increasingly concerned that the dramatic increase in the nature, number, and monetary value of non-audit services that accounting firms provide to audit clients may affect their independence. ” As for the lack of research, the SEC said, “Some argue that no empirical evidence justifies our concerns. The SEC argues that “[i]t is common sense ... and confirmed by studies, that a person’s decision changes when he or she has a stake in the outcome of that decision. Furthermore, common sense dictates that the more someone--including an auditor--has at stake, the more likely his or her decision is to be affected. This article also explains usefulness of disclosures.
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Format: HTML | Date: Aug 2000 | Pages: 1
