Auditor Independence and Nonaudit Services: The SEC's Independence Hearings through a User-Primacy Lens

Abstract

The debate over an auditor's ability to remain independent while simultaneously providing nonaudit services to the audit client has a long history. In recent years, several factors have combined to heighten regulators’ concerns about this issue. This study uses a case methodology research design to analyze the testimonies given by financial statement users at the Securities and Exchange Commission's (SEC, 2000b, 2000c, 2000d, 2000e) Independence Hearings in relation to this debate. The analysis is framed by the principle of user primacy. Findings indicate that changes from the SEC's initial proposal to final rule on independence are more closely aligned with preparers’ than users’ preferences, despite claims to the contrary.

Citation

Thornton, J.M. (2006), "Auditor Independence and Nonaudit Services: The SEC's Independence Hearings through a User-Primacy Lens", Lehman, C.R. (Ed.) Independent Accounts (Advances in Public Interest Accounting, Vol. 12), Emerald Group Publishing Limited, Leeds, pp. 67-84. https://doi.org/10.1016/S1041-7060(06)12005-2