Independence of auditing Essay Example | Topics and Well Written Essays - 1000 words

independency of auditing - Essay ExampleThe accuracy and reliability factor basically governs the shareholders relationship with the company, because such published history reports are the only indication about the companys financial position (especially the soundness and meet functioning of its current investments), and as such, represents the basis on which the shareholders decide about investment in the company. Shareholders, in that locationfore, learn to be assured about the accuracy and reliability of the companys published accounts. This is the reason why it is mandatory for companies to have their accounts checked by an independent auditor. High profile cases like the Enron debacle lead to not only lower the esteem of the auditing profession as a whole, but also to rankle confidence of shareholders, making them doubt the authenticity of the reports published (Hermes.co.uk).The global auditing world is ruled by 5 auditing firms (called the Big louvre) that have the capa bility to audit the largest public companies in the world. They are PriceWaterhouseCoopers (PwC), Klynveld, Peat, Marwick, Goerdeler (KPMG), Ernst & Young (E&Y), Deloitte & Touche (D&T), and Arthur Andersen (AA) Europa.eu, 2002. The Big cardinal attained their structure and position as a result of several mergers with other auditing firms (the last study merger involved Price Waterhouse and Coopers & Lybrand, who formed PriceWaterhouseCoopers, thereby trimming the Big Six to Big Five Europa.eu, 2002). After the Enron scandal in 2001, AA was struck off the Big Five list with the result that there are now the Big Four audit firms. Within the U.K, PwC is the largest audit firm, although by a ecumenic comparison, the Big Four are almost evenly matched (Oxera.com, 2006).Public concern about the independent berth of auditors stems from the trend of audit firms to diversify to other non-audit services