RIS ID
141385
Abstract
This paper makes the case for the greater regulation of auditors. It argues that the courts are too sympathetic to the use of disclaimers to escape liability to investors, individual shareholders and third parties. The approach is to review the relevant court cases which established the concept of "opinions" and disclaimers as a means of protection and argue for greater recognition of the wider impact of the audit role. The paper finds that the best explanation as to why auditors use disclaimers is Social Darwinism. The application of professional ethics as adumbrated in various codes is not relevant to this practice. The paper is original in that it draws on a recent (2015) court case involving the audit firm Grant Thornton. Its value is that it argues for greater state audit regulation. The grounds being that adherence to legal form ignores the substance of the wider implications involved. As it is state regulation of auditors is largely a form of licensing to limit competition.
Publication Details
Hooper, K. & Wang, J. (2015). Audit firms and disclaimers: Is the bar set too low?. 27th Asian-Pacific Conference on International Accounting Issues (pp. 1-10).