Reconceptualizing the Management–Auditor Relationship by Appling the General Partnership Contract to Challenge Independence:

Abstract

The audit function in a corporate model can be a defective tool in monitoring executive management. Arguably, the Sarbanes-–Oxley Act (SOX) inadvertently has placed auditors in unwanted positions while increasing their independence. Auditors’ reliance on their clients for collecting information, financial dependence, and self-bias in processing information restrain them from neutrally and objectively judging corporate reporting. Mandated rules can never substitute integrity and the desired objectivity by shareholders. By reconceptualizing the result of the relationship as a general partnership where trust plays a critical role, this study considers the relationship between management and their auditors, offers an explanation about the audit firms’ behavior, and offers reasons for the failure of some audit for committing unethical actions. The analysis leads to testable empirical and policy implications. Accounting theorists should be on board critiquing and retheorizing positively but not normatively. A corporation with the absence of an objective party that shareholder count to attest corporate reporting impartially.

Accounting as a sustainable crafted technology for human exchange activities with nature: A defense of accounting continuity

“…Shifting the theoretical concept in the accounting theory responds to the call in the accounting literature for retheorizing the corporation from an accounting perspective (Al-Adeem, 2017;2022b;Suojanen, 1954). Since accounting is "an intellectual and pragmatic tool in social domination" (Tinker, 1985: 100), a new theoretical concept aligning with the increasing interest in corporate ecological and social responsibilities should be adopted in accounting.…”

“…At present, the role of accounting in the corporate model, where professional managers who are not the owners lead corporate entities (Berle & Means, 1932), has been a challenge for the accounting profession (Merino, 1993;Previts & Merino, 1998;Al-Adeem & Fogarty, 2010;Al-Adeem, 2017;Al-Adeem, 2021;2022a;2022b;Al-Hazzani & Al-Adeem, 2020). Accounting theorists, academic accounting organizations, and accounting professional bodies have all worked toward normalizing the content of corporate reports (Al-Adeem, 2019a;Al-Adeem & Fogarty, 2010) the Statement on Accounting Theory and Theory Acceptance (SATTA, 1977).…”

A Defense on Accounting Discretion: An Empirical Inquiry based on Users’ Awareness

“…After fund providers finance their corporations, executive management invests the acquired funds in operating assets. Assets that are capitalized costs should yield returns to compensate for operating costs and reward fund providers on their investments 7 . As humans are risk-averse 8 , such returns should mitigate the risk of stewarding their funds to executive management.…”

“…Retrieved https://egrove.olemiss.edu/aicpa_guides/522/ (last visit 8/10/2022). 7 For a briefing on these three cycles (e.g., finance, investment, and operation cycles) and the interrelationship among financial statements of an entity (balance sheet, income statement, cash flow statement) see Weygandt et al (2012, ch.1). 8 "Risk averse" means that return on a risky investment should outweigh the risk involved.…”

Understanding Professor Ross Watts by Applying Kuhnian Interpretation of Science Progress

“…The divorce between the two emerged with the advent of corporation as a contemporary model for conducting business [6]. The corporation has been a daunting mission that has come upon accountants [1,3,[7][8][9][10][11][12]. This essay is not a comprehensive review of Watts' contributions and of his views on accounting and auditing.…”