Abstract
In this chapter, an attempt has been made to critically review statutory auditor independence in five high profile accounting scandals selected from each of the five select countries and to conduct a comparative analysis of them. The five scandals occurred at Enron, Polly Peck International, Satyam, Zhengzhou Baiwen and ComRoad AG. The analysis shows that a lack of professional scepticism of statutory auditors is a major sign of impaired independence in a corporate failure. Fundamental issues governing audit procedure, such as appointment, remuneration, non-audit services, tenure, the role of the audit committee, the role of audit inspection mechanisms and the disciplinary framework have always played a significant role in controlling statutory auditor independence in each of those corporate accounting scandals. Hence, every time a scandal occurred, these fundamental issues were revisited by the regulatory authorities.
This is a preview of subscription content, log in via an institution.
Buying options
Tax calculation will be finalised at checkout
Purchases are for personal use only
Learn about institutional subscriptionsNotes
- 1.
Wells, J. (2001). … And nothing but the truth: Fraudulent financial disclosure. Journal of Accountancy, 192(1), 47–52.
- 2.
Hoffman, V., Zimbelman, M. (2009). Do Strategic Reasoning and Brainstorming Help Their Standard Audit Procedures in Response to Fraud Risk? The Accounting Review, 84(3), 811–837.
- 3.
Fearnley, S., Beattie, V., & Brandt, R. (2005). Auditor Independence and Audit Risk: A Re–conceptualization. Journal of International Accounting Research, 4(1), 39–71.
- 4.
Duska, R. (2005). The Good Auditor – Skeptic or Wealth Accumulator? Ethical Lessons Learned from the Arthur Anderson Debacle. Journal of Business Ethics, 57(1), 17–29.
- 5.
Bakshi, S. (2004, February). Safeguarding Auditors Independence: The Profession at the Crossroad. Chartered Accountant, 52(8), 821–826.
- 6.
Dastur, J. (1998, July). Inadequate Safeguards. Chartered Accountant, 47(1), 207–213.
- 7.
Jones, M. (2011). The Creative Accounting and Fraud Environment. In M. Jones (Ed.), Creative Accounting, Fraud and International Accounting Scandals (pp. 21–30). New York: Wiley Publication.
- 8.
Ibid., pp. 481–484.
- 9.
World Bank Database (2012). Gross Domestic Product (PPP). Retrieved from World Bank Website: http://databank.worldbank.org.
- 10.
CIA World Fact Book (2010). Field Listing – GDP PPP Exchange Rate. Retrieved from Central Intelligence Agency Website: https://www.cia.gov.
- 11.
IMF (2013). Report for Selected Countries and Subjects (PPP Valuation of Country GDP). International Monetary Fund.
- 12.
Berenson, A. (2001, November 1). S.E.C. Opens Investigation into Enron. The New York Times.
- 13.
Healy, P., & Palepu, K. (2003). The Fall of Enron. Journal of Economic Perspectives , 17/2(3), 1–45.
- 14.
Wearing, R. (2005). Cases in Corporate Governance. London: Sage Publication.
- 15.
Gwilliam, D., & Jackson, R. (2011). Creative Accounting – UK Experience. In M. Jones (Ed.), Creative Accounting, Fraud and International Accounting Scandals (pp. 386 – 400). New York: Wiley Publication.
- 16.
Securities Fraud Office Release (2012). Asil Nadir Found Guilty. Retrieved from SFO Website: www.sfo.gov.uk.
- 17.
Bhandari, B. (2009). Satyam Saga. New Delhi: BS Books.
- 18.
Fernando, A. (2010). Op.cit.
- 19.
Chen, J., Chen, S., & Su, X. (2001). Op.cit.
- 20.
Wikipedia. ComRoad AG. Retrieved from Wikipedia Website: de.wikipedia.org.
- 21.
Daum, R. (2002). Navigation into Nowhere. Borse Online, 6, 24–25.
- 22.
Lenz, H. (2011). Accounting Scandals in Germany. In M. Jones (Eds.), Creative Accounting, Fraud and International Accounting Scandals (pp. 195–208). New York: Wiley Publication.
Bibliography
Books and Book Sections
Banerjee, B. (2011). Corporate Creative Accounting in India: Extent and Consequences. In M. Jones (Ed.), Creative Accounting, Fraud and International Accounting Scandals (pp. 233–252). New York: Wiley Publication
Bakshi, S. (2004, February). Safeguarding Auditors Independence: The Profession at the Crossroad. Chartered Accountant, 52(8), 821–826
Crutchley, C., Jensen, M., & Marshall, B. (2007). Climate for Scandal: Corporate Environment that Contribute to Accounting Fraud. The Financial Review, 42, 53–73
Fearnley, S., Beattie, V., & Brandt, R. (2005). Auditor Independence and Audit Risk: A Re-conceptualization. Journal of International Accounting Research, 4(1), 39–71
Gerotra, S., & Baijal, M. (2002). Prominent Peer Review Practice Around the Globe – Ensuring Quality Audit. Chartered Accountant, 51(1), 76–83
Giroux, G. (2008). What Went Wrong? Accounting Frauds and Lessons from Recent Scandals. Social Research, 75(4), 1205–1238
Maloo, M. (1993). The Expectation Gap and Risk of Audit: Who to Blame for Escalating Insurance Cost? Chartered Accountant, 42(2), 74–78
Mukherjee, S. (2000). Fight Against Corruption by Accountants. Management Accountant, 35(7), 487–491
Tillman, B. (2002). Enron Fallout Spurs Securities Fraud Bill. Information Management Journal, 34(4), 12
Weber, J., Willenborg, M., & Zhang, J. (2008). Does Auditor Reputation Matter? The Case of KPMG Germany and Com Road AG. Journal of Accounting Research, 46(4), 941–972
Zewski, S., & McCarthy, I. (2005). Response to Corporate Fraud in United States and Europe. Review of Business, 26(2), 15–23
Author information
Authors and Affiliations
Rights and permissions
Copyright information
© 2018 The Author(s)
About this chapter
Cite this chapter
Roy, M.N., Saha, S.S. (2018). Statutory Auditors’ Independence in Select Corporate Accounting Scandals Since 1990: A Comparative Study. In: Statutory Auditors’ Independence in Protecting Stakeholders’ Interest. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-73727-0_3
Download citation
DOI: https://doi.org/10.1007/978-3-319-73727-0_3
Published:
Publisher Name: Palgrave Macmillan, Cham
Print ISBN: 978-3-319-73726-3
Online ISBN: 978-3-319-73727-0
eBook Packages: Economics and FinanceEconomics and Finance (R0)