Conflicts of Interest between Auditors and Clients Essay -- Business E

The complete destruction of companies including Arthur Andersen, HealthSouth, and Enron, revealed a significant weakness in the United States audit system. The significant weakness is the failure to deliver true independence between the auditors and their clients. In each of these companies there was deviation from professional rules of manoeuver resulting from the pressures of clients placed upon their auditors (Goldman, and Barlev 857-859). Over the years, client and auditor relationships were intertwined tightly putting aside the unbiased function of auditors. Auditor careers depended on the success of their client (Kaplan 363-383). Auditors found themselves in situations that put their profession in a questionable time driving them to compromise their ethics, professionalism, objectivity, and their independence from the company. A vital trust relationship role for sovereign auditors has been woven in society and this role is essential for the effective functioning of the fin ancial economic system (Guiral, Rogers, Ruiz, and Gonzalo 155-166). However, the financial world has lost confidence in the trustworthiness of auditor firms. There are three potential threats to auditor independence executives hiring and firing auditors, auditors taking positions the client instead of the unbiased place, and auditors providing non audit operate to clients (Moore, Tetlock, Tanlu, and Bazerman 10-29).According to the Institute of Internal Auditors, conflict of interest is a situation in which an internal auditor, who is in a position of trust, has a competing professional or personal interest (Institute of Internal Auditors). Competing interests can make it difficult to fulfill his or her duties impartially as an auditor. A perso... ...tion Law 29 (2)363-383. 365-partners and clientsThreats to Auditor independency The Impact of Relationship and Economic Bonds. By Ping Ye Carson, Elizabeth Simnett, Roger. Auditing, Feb2011, Vol. 30 Issue 1, p121-148, 28p, 1 Diagram, 6 Charts DOI 10.2308/aud.2011.30.1.121Exploring Trust and the Auditor- invitee Relationship Factors Influencing the Auditors Trust of a Client Representative. By Rennie, Morina D. Kopp, Lori S. Lemon, W. Morley. Auditing, May2010, Vol. 29 Issue 1, p279-293, 15p, 1 Diagram, 3 Charts DOI 10.2308/aud.2010.29.1.279The Auditor-Firm Conflict of Interests Its Implications for Independence A Reply. By Goldman, Arieh Barlev, Benzion. Accounting Review, Oct75, Vol. 50 Issue 4, p857-859, 3pAre Auditors proper Too Cozy With Their Clients? By Briloff, Abraham J.. Business & Society Review (00453609), Summer85, Issue 54