The Age of the Truly Independent Auditor
Tackling Auditing Fraud

Visiting accounting professor David Young explained what he thinks it will take to eliminate auditing fraud and to establish the truly independent auditor at the 13th International Symposium on Ethics, Business and Society. The symposium, whose theme was “Accounting and Accountability: A Challenge for Corporate Culture,” was held at IESE in Barcelona on May 7 and 8. Here, Young discusses the U.S. situation and points out the pitfalls in the relationship between auditors and their clients.

Why did you choose “The Age of the Independent Auditor” as the focus of your talk?
The fact that auditors are paid by the companies they audit has always troubled me. It creates a less-than-arm’s-length relationship in a setting where arm’s-length relationships are essential to the believability of an audited set of financial statements. The issue first struck me when I was having a conversation with an auditor who told me that he was about to “negotiate” with his client’s CFO. I couldn’t imagine then, nor can I imagine now, why any sort of negotiation should be necessary. Questioning, yes. Clarifying, okay. But negotiation? In my view, auditors are supposed to “call ’em as they see 'em.” When that happens, we will enter the age of the truly independent auditor. At the moment, we are in the age of the pseudo independent auditor.

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