|
|
The Management-Auditor Relationship:
Auditing Motivations Dr Andrew Higson Abstract In the wake of the recent financial scandals attention has again been focused on the role and performance of the external auditor. When companies collapse soon after an unqualified audit report has been issued, or a fraud was undetected by the auditors, the perception is often that auditors have failed in their duties. A lack of independence arising from auditor dependence on audit fees or other consultancy services is often cited as reasons for these perceived failures. If accounting and auditing were simply technical subjects, these views would be easy to understand, however, the production of the financial statements by management requires a multitude of judgements and contains many subjective assessments. Consequently, this paper argues that external auditing could be viewed in terms of the audit of management's motivations. The treatment of something in the financial statements may be appropriate, inappropriate or questionable depending on the motivations behind it. Therefore, auditors are not just auditing the figures that are presented to them, they really need to understand the motivations behind the figures - and it is this which the paper argues is the cause of many of their problems. This can be found in chapter 6 of Corporate Financial Reporting: Theory & Practice. An early version of this paper was presented at the British Academy of Management Annual Conference 2002, London, 9-11 September 2002.
|