Abstracts Business

The Current State of the Auditing Profession Under Regulation

by Kathy Lynette McCall

Abstract This qualitative study examines the impact of regulation on the auditing profession. I conducted it against the backdrop of the accounting scandals that embarrassed the profession, diminished the value of the audit and introduced the Sarbanes-Oxley Act of 2002. I carried it out through personal interviews of eighteen current and former public auditors. With five basic research questions, the study involved asking ten focused questions of the auditors that examined their perspectives on the practice of auditing, the ethical environment in which they practice, and the potential of independence to be affected by such dictates as mandatory rotation. The participants, divided into three distinct groups, voiced united opposition to a checklist mentality, redefining risk, and recasting professional development in broader and more meaningful terms. They acknowledged a greater awareness of ethics, but expressed confidence in their own individual integrity and that of the profession as a whole. They lamented that the future viability of the profession was at stake, due largely to the increased costs of auditing from the regulatory perspective, costs not necessarily transferrable to the auditee. They were also largely pessimistic that the profession might ever regain its self-policing power, although a minority saw that possibility as firms face higher costs and lower quality audits become apparent. The value of the study is its potential to sound a warning to auditing professionals that they risk becoming irrelevant on the current course. The window of opportunity is open, but relatively narrow for commanding a return to a position of leadership in the global economy.