Auditor Independence in the UK: Understanding the impact of reclaiming professional legitimacy on the social contract of audit

Diamanti, Rosemary (2022) Auditor Independence in the UK: Understanding the impact of reclaiming professional legitimacy on the social contract of audit. Doctoral thesis, Northumbria University.

Text (Doctoral thesis)
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This thesis explores how auditors in the United Kingdom understand the fundamental principle of independence and how, if at all, this differs across the profession and in time. The overarching aim of this research is to address the gap in understanding independence as a phenomenon that underpins the profession’s legitimacy and upholds the social contract that exists between it and society, from the perspective of those in practice. Although existing research has explored different aspects of auditor independence such as its importance in appearance, it has yet to explore how those in the profession understand this fundamental concept and how it shapes their perception of the audits social purpose today. Concerns surrounding auditor independence remain and in recent years there has been a surge of public scrutiny surrounding the profession’s ability to act independently due to an increased number of highly public scandals.
This research is underpinned by a social constructionist epistemology and a phenomenological philosophical perspective. Data was collected through 20 face-to-face, semi-constructed interviews. Participants all had auditing experience which ranged from current audit trainees to individuals with over 30 years’ experience. Analysis was through an inductive, interpretive phenomenological analysis combined with a thematic approach, allowing themes to emerge.
The core findings are that there exists a significant difference in auditors’ understanding of independence as well as the social purpose of audit across the profession. More specifically, this difference was found to be between two groups that emerged through the analysis of the data, those who qualified prior to early 2000s (pre-Enron) and those qualified after the mid-2000s (Post-Enron). A number of the participants cited that the Enron scandal of 2001 had significantly changed the overarching principle of independence and the profession’s purpose in society. Further analysis found that due to several highly publicised auditing scandals, the profession has used a number of mechanisms to reclaim its legitimacy, including increased standardisation, scapegoating and blame avoiding, as well as shifting the institutional logic of society’s expectations. Concurrently to this, this thesis finds significant evidence of the long-term impact of both increased commercialisation of the profession as well as intensified pressures of audit-market-competition. This in turn has removed both individual auditor professional autonomy and identity as an ‘auditor’ and has created a new set of compliant ‘accountants’ who do not see a purpose to their role and puts professional commitment at risk of being lost.
The contribution of this thesis is therefore fourfold, firstly, it expands current understandings of the Social Contract theory and its relationship with Legitimacy Theory specifically in the context of the auditing profession. Second, it provides new nuanced insight into the lived experiences of auditors who entered the profession prior and after the Arthur-Andersen collapse and the differences in their experiences and understanding audit as a social phenomenon. Further, the unique approach to conducting and analysing data provides new guidance in the phenomenological methodology area. Finally, the findings of this research add contemporary understanding the to the profession’s own knowledge of auditing in the UK and how their own focus of changes made may not be impacting their professional members in the way they intended.

Item Type: Thesis (Doctoral)
Uncontrolled Keywords: Auditor Independence, Legitimacy theory, Commercialisation of the audit profession, Phenomenology, Social Contract Theory
Subjects: N100 Business studies
Department: Faculties > Business and Law > Newcastle Business School
University Services > Graduate School > Doctor of Philosophy
Depositing User: Rachel Branson
Date Deposited: 17 Oct 2022 08:18
Last Modified: 17 Oct 2022 08:30

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