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This paper has two purposes. The first is to demonstrate that over time, and in a number of professional and academic places, the concept of auditor independence has been contested; that is, there have been different concepts of auditor independence within different time periods, and even when there appears to have been consensus on the meaning of auditor independence, there have been significant debates about auditor independence. The second purpose of the paper is to advocate a complete reconsideration of the concept of auditor independence; one which would move us towards the idea that auditors should be prohibited from acting as advocates in any way on behalf of their clients, and that client management should have no ability whatsoever to determine the audit fee or the scope of audit engagement. These are controversial ideas. They are meant to be so.

Independence is the cornerstone of the auditing profession. Even so, it is often assumed that acquiescing to the audit client when a disagreement occurs is more beneficial to the auditor-client relationship than asserting one’s independence (e.g., see Wang & Tuttle, 2009). We look more closely at the issue in the context of auditor-client management disagreements as recalled by experienced auditors.

We find that for most disagreements in which the auditor did not make any concession at all, the auditor-client relationship was either unaffected or strengthened. We find that a client’s use of pressure tactics did not appear to influence whether or not the auditor made a concession, but that a client’s use of pressure tactics, was associated with damage to the auditor-client relationship. The importance of the issue causing a disagreement was positively associated with the likelihood of the auditor staying with his/her initial position.

Mandatory auditor firm rotation (mandatory rotation) has been a controversial issue in the United States for many decades. Mandatory rotation has been considered at various times as a means of improving auditor independence. For example, in the United States, the Public Company Accounting Oversight Board (PCAOB) has considered mandatory rotation as a solution to the independence problem (PCAOB, 2011) and the European Parliament approved legislation that will require mandatory rotation in the near future (Council of European Union, 2014). The concept of implementing a mandatory rotation policy has been encouraged by some constituents of audited financial statements and rejected by other constituents of audited financial statements. Although there are apparent pros and cons of such a policy, the developmental process of such a policy in this country has not necessarily been an open-democratic, objective process. Universal mandatory rotation may or may not be the ideal solution; however, an open-democratic, objective process is needed to facilitate the development of a solution that considers the needs of all major stakeholders of audited financial statements – not simply accounting firms and public companies, but also investors. The purpose of this paper is to critically examine key issues relating to mandatory rotation and to encourage and stimulate future research and ongoing dialogue regarding this issue, in spite of efforts by certain constituents to silence the issue. This paper provides an overview of the various reasons, including practical, theoretical, political, and self-motivated reasons, why a mandatory rotation policy has not been implemented in the United States in order to address the potential conflict of interest between the auditor and client. This paper will also discuss how some deliberations of mandatory rotation have been flawed. The paper concludes with a summary of key issues along with two approaches for regulators, policy makers, and academics to consider as ways to improve the process and address auditor independence. The authors are not advocating for any specific solution; however, we are advocating for a more objective, unified approach and for the dialogue regarding auditor rotation to continue.

This paper takes position against the spread of the free-market logic in the domain of accountancy, where free market is often viewed as undeniably benefiting society and users of financial statements. A key moment that paved the way for the growing influence of the free-market logic in accountancy resides in the elimination of institutional ethics rules prohibiting direct and uninvited solicitation of clients, which occurred in the 1970s. Importantly, it was (some would say quite naïvely) assumed that auditors would be able to maintain their independence from auditees in a surrounding climate emphasizing market competition and individualism. However, research indicates that before the collapse of Enron and Arthur Andersen, a number of auditors were significantly concerned about auditor independence being undermined in actual practice. Yet, their concerns were kept largely in the dark. It took the billion-equity collapse of Enron and the powerful imagery related to the shredding of documents by its external auditor Arthur Andersen, as well as the collapse of WorldCom a few months afterwards, to bring to light the undermining of auditor independence in the public arena and to create a momentum in favour of reforming authoritative regimes of auditor independence, therefore constraining to some extent the influence of the free-market logic in accountancy. My main argument is that these collapses could perhaps have been avoided if auditors’ dissenting and negative points of view on auditor independence had been voiced, heard, and appropriately taken into account by accounting organizations and regulatory bodies. Accordingly, it is recommended that channels be established for practising auditors to communicate concerns that emerge from their daily experiences and which cast doubt on the conceptual foundations of financial auditing. Establishing such mechanisms may help to guard against the excesses of the free-market logic; the latter definitely should not reign unchallenged.

We suggest that a notion of auditor independence, constructed in Anglo-American epistemology and practice, is a social construct that has different meanings in different historical, socio-cultural and economic milieus. We have researched how this idea of auditor independence, incorporated locally from the International Federation of Accountants (IFAC) Code, is perceived and has been implemented in three countries of the Central and Eastern European (CEE) region: Poland, the Czech Republic and Russia. With a view to seeking a comprehensive understanding of what is happening in transition economies, all aspects of auditor independence – from basic educational provision for an auditor, to complex aspects such as the provision of non-audit services – were considered. From all these aspects of independence, a framework of the requirements for independence was developed. As a result of this research, we question whether the usual international definitions of auditor independence, as laid out in the IFAC Code, with their separation into mind and appearance, are at all realisable.

This study aims to examine the direct influence of workplace bullying (WB) on internal auditors’ independence using the nexus between the agency theory and social exchange theory. From the internal auditors’ perspective, the investigation covered both government and private colleges and universities in one of the Middle East countries.

A survey was administered and delivered to internal auditors at each of the 85 educational institutions. A total of 267 valid questionnaires were analysed. The study’s measurement and structural models were tested and evaluated by using SmartPLS v.4 and partial least squares-structural equation modelling.

The study results indicated that bullying is common among senior managers, and that it has a significant, negative, high-level and direct effect on the independence of internal auditors in the higher education sector.

Regulators and other stakeholders should make a deliberate effort to promote positive behaviours and abandon negative ones regarding the independence of internal auditors and the performance of audit teams, which play a crucial role in enhancing the efficiency of audit units. For example, enhancing coordination and communication internally and externally. In addition to providing the internal auditors with equitable advancement and learning opportunities, senior management should also support their professional development.

To the best of the author’s knowledge, this study is the first to examine the relationship between WB and the internal auditor’s independence in the context of government and private organisations in Southwest Asian countries.

This study aims to understand independence in internal auditing by investigating how internal auditor independence is constructed when analysed in its corporate governance context.

A critical discourse analysis (CDA) of the corporate governance reports of Swedish large stock market listed non-financial companies, for three consecutive years, is undertaken, using a theoretical lens of organisational embeddedness and operational coupling to understand independence as a situated practice.

The study develops four archetypes of internal auditor independence – autarchic, instrumental, symbiotic and subservient – and discusses each archetype's implications for independence, related to tripartite relations with management and the audit committee, regarding who has the mandate to direct work and how the work is done. It finds that internal auditors always have a capacity to be independent. Although they are not independent in relation to agents in the subservient archetype, they are independent of those down the organisational chain of command, suggesting independence is both situational and relational.

The analysis contributes a novel approach to the literature and develops a conception of independence using the dimensions of embeddedness and coupling. The archetypes offer an analytical framework for future studies on independence.

Internal auditors may understand their practice differently through the archetypes that result from this study.

Internal auditors' power relations within corporate governance further an understanding of the pressures on internal auditors and their role.

This study contributes new knowledge on the situatedness of independence by showing how internal auditors are embedded and coupled helps build their independence.

A notion of auditor independence, envisaged as crucial to the credibility of the audit function, resides in professional Codes of Ethics in much of the western world. Since the beginning of the 1990s, the auditor independence construct has been imported eastwards and incorporated into legislation and Code of Practices amongst central and eastern European economies (CEE), together with other requirements, as the countries prepare for their accession to the European Union. This study is aimed at ascertaining the meanings conveyed by the auditor independence construct and its state of realisation in one of the transition economies of the CEE region, the Czech Republic. Also, the study seeks to understand how local culture impacts upon a particular understanding of auditor independence. In order to examine the auditor independence in this part of the world, a framework for analysis incorporating structural conditions, local traditions and culture is proposed. The analysis is conducted first de jure, and is based upon a review of the Czech law and professional regulation. This is complemented with a de facto analysis based upon interviews with audit practitioners, regulators and financial statement users in the Czech Republic and on a review of Czech media coverage. What emerges from the study is a particular local understanding of the auditor independence construct, perceived primarily as an economic concept in the context of market instability and the immature legal framework. It appears that there is a tendency to follow the form of audit procedures without substantial rationalisation. We conclude that socio‐economic and cultural pressures appear to far outweigh any formal safeguards implemented to maintain professional integrity and competence in the CEE region.

Practising internal and external auditors regularly find that crucial concepts governing how they operate are the twin terms of independence and objectivity. Part of the problem is that the two terms are often equated. The impact can be conflict with the auditee, misunderstanding with other stakeholders, impairment of efficiency and effectiveness, and role conflict within the internal audit department. The Institute of Internal Auditors is reviewing some of the cherished notions of internal audit in the light of pressures and developments in the business environment. It has already produced a new definition of internal auditing, which, as before, includes the terms independence and objectivity. Consistently, it decided to re‐evaluate these two terms, and established an international research team. This was the briefing submission from the UK, which was highly influential in determining the final product, not yet in the public domain. It considers professional statements and standards, research and developments in both internal and external auditing.