Perceptions of auditor independence in Barbados

Abstract

Purpose-The study investigates the perceptions of auditor independence (PAI) between auditors and users in Barbados. Design/methodology/approach-A self-administered questionnaire was adapted and modified from Beattie et al.'s study in the UK the sample included 66 auditors and 148 users. Factors relating to the size and closeness of Barbadian society, lengthy tenure and being a sole audit practitioner, small audit firm, provision of non-audit services (NAS) among others, were investigated. Findings-Economic dependence of auditor on the client, the provision of NAS, high competition, small firm size, being a sole practitioner, lengthy tenure and the size and closeness of Barbadian society were found to negatively affect PAI. Auditor independence was perceived to be enhanced by the existence of audit committees, rotation of audit partners, risks to auditor arising from poor quality, regulatory rights and requirements surrounding auditor change and an auditor's right to attend and be heard at the company's annual general meetings. Research limitations/implications-Owing to the relatively small sample size and small emerging market, these findings should be interpreted with caution. Practical implications-This research serves to inform audit related policies and regulation on the potential threats to auditor independence. Originality/value-This paper contributes to the limited body of research on auditor independence in small developing countries.

Perceptions of Auditing and the Provision of Non-Audit Services: Case Study in Libya

“…This finding is inconsistent with the reports of Abu Bakar et al (2005) and Alleyne and Devonish (2006) who found that individual non-audit services may affect auditor independence influence audit quality perceptions differently and that the provision of NAS is a significant threat to perceptions of auditor independence.…”

“…The potential for public perception of impaired auditor independence when a firm provides both audit and NAS is confirmed by several researchers (Hay et al, 2006;Simunic, 1984, Beck et al, 1988a, Canning and Gwilliam, 1999Craswell, 1999;Abu Bakar et al, 2005;Alleyne and Devonish, 2006), who note that the high fees involved suggest too great a mutual reliance between auditor and auditee. However, as noted by Mautz and Sharaf (1961) half a century ago, the interests of auditor and auditee become the same when both audit and NAS are provided, and this inevitably leads to an end to the accountant's independence.…”

Professional Skepticism and Auditors’ Assessment of Misstatement Risks: The Moderating Effect of Experience and Time Budget Pressure

“…Individuals may acquire experience through direct observation or participation in a particular event or activity (Alleyne et al, 2006). Experiences in work-related challenges expose auditors to gaining more confidence and competences in relation to making riskconnected decisions (Payne and Ramsay, 2005).…”

Dimensions of Auditor Independence: A Pilot Study

“…Krosnick & Fabrigar, 1997;Beattie, Brandt, & Fearnley, 1999) as being more reliable and not forcing the respondents to respond in a particular direction thereby increasing measurement error. This choice is also in line with prior interdependence studies examining perceptions of AI (e.g., Alleyne, Devonish, & Alleyne, 2006;Al-Ajmi & Saudagaran, 2011). The two dimensions examined are Independence in Fact (IIF) which is evaluated by three variables; Perceived objectivity, Perceived integrity and perceived Professional skepticism and Independence in appearance (IIA) which is evaluated by six variables; self interest, self review, familiarity, advocacy, intimidation and safeguard implementation.…”