The Conundrum of Auditors’ Independence: Insights from The Practitioners

Abstract

An economy pre-dominated by corporate scams, financial scandals, roosted financial statements, and overstated profits cannot flourish in the long run. The core responsibility of making sure that the Financial Statements of a company show a ‘true and fair’ view of the Company’s financial position rests on the Auditor. However, when auditors' independence is jeopardized, there is a chance that their judgment could be swayed by the company's or other parties' interests, thereby resulting in the falsification of financial statementsIn this backdrop, the current study is an attempt to decipher the reasons that are detrimental to Auditors’ Independence as proposed by the Auditors themselves. The research surveyed 65 Chartered Accountants, 65 Cost Accountants, 25 Academicians teaching audit, investors, and Chartered Accountancy final students to identify factors disrupting auditors' independence. Based on corporate scams, research papers, and judicial case decisions, 14 variables were identified that determine the reason for auditors losing their independence and conducting unethical client-favoring audits .14 questions were devised for respondents with Likert 5-point scale where 5 represents strongly agree and 1 as strongly disagree. The mean score of each respondent was taken to determine the degree of agreeableness to each variable. Secondary data, including books, journals, newspaper articles, and lectures, was used to propose remedies and describe the role of Business Spirituality in overcoming ethical dilemmas. Further, this paper also addresses the ethical dilemma faced by an auditor while conducting an honest audit. This paper also tries to find a solution to such an issue using the technique of moral value development and Business Spirituality.