28 November 2019

ECGI: Addressing the auditor independence puzzle - regulatory models and proposal for reform

Authors of the paper argue that all of the regulatory responses previously suggested in the literature do not effectively reduce the auditor’s conflict of interests or they do so at a very high cost for the profession. Their paper suggests new strategies to solve the auditors’ independence puzzle.

First, authors argue that, in the context of controlled firms, auditors should be elected with a majority-of-the-minority vote. Second, while auditors in many jurisdictions are subject to certain temporal prohibitions to be hired by previous clients, authors believe that the length of these temporal prohibitions should be extended.

Full paper on ECGI

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