A CRITICAL ANALYSIS OF AUDITOR INDEPENDENCE UNDER THE NEW AUDIT REGULATIONS IN THE EU

Year 2018, Volume: 3 Issue: 5, 85 - 150, 31.07.2018

Ekrem Solak

Abstract

The subject of this article is the need for total independence of the auditors of annual company accounts, so that the companies’ investors and shareholders, actual and potential, can place informed
and well-founded trust in its official financial statements. This study sets out the various incentives a hired firm of auditors may have for adopting a subjective and unduly favourable stance towards its
employers and explains the nature of the risks thereby entailed to the company’s investors and shareholders, and indeed to the wider general public. It analyses the various legislative safeguards already
adopted and the formal recommendations or proposed directives, made by the EU and US legislatures in recent years, to minimise or eliminate such risks, and assesses whether these regulations could ensure auditor independence.

Keywords

auditor, auditor independence, the role of auditors in corporate governance, audit regulations

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