Reinventing auditing, redefining consulting and independence

Abstract

This paper deals with recent developments in auditing, taking KPMG's 'business measurement process' as its example. From this example it is discussed how and why auditing is currently being 'reinvented'. The 'reinvention' of auditing, it is argued, represents a fundamental break with the established epistemological dualism between auditing and management advisory services,1 that is central to most literature on auditor independence, including the European Commission's Green Paper. Consequently, it is not only auditing that is being reinvented, it is also consulting and independence, and the consequences of this rupture are finally discussed. The paper concludes that the auditor cannot be independent because auditing is no longer independent.

From inspection to auditing: Audit and markets as linked ecologies

“…Discourses seeking to redefine and market auditing in consulting terms also took place in the West, in the 1980s and early 1990s, particularly before the Enron scandal (see e.g. Jeppesen, 1998;Robson et al, 2007). Yet differently from the West, in Russia discourses about consulting emerged at the same time when auditing was introduced, and not as something that was added on to audit.…”

“…(Bukhgalterskii uchet, 1998, No. 8, p. 8) A shift is articulated from socialist inspection to Western-oriented business consulting (see also Baklan, 1988;Pyatenko, 1998Pyatenko, , 2001 (Hinings et al, 1999;Jeppesen, 1998;Robson et al, 2007), the "added value" of their services to potential clients.…”

“…And as studies of changes in Western audit practices have made us aware (see e.g. Curtis & Turley, 2007;Gendron et al, 2007;Jeppesen, 1998;Robson et al, 2007), such processes of defining and redefining are likely to be the site of significant struggles, where outcomes are only provisional, and where they can be challenged and changed more than once.…”

The consideration of environmental matters in the audit of financial reports

“…Hopwood (1996), Jeppesen (1998) and Humphrey and Moizer (1990) observed that much of audit and its associated technologies remained a 'black box'. Cooper and Robson (2006, p. 240) emphasised the value of knowing how professional audit works, and how "competence and skill [are] constructed and reproduced across countries".…”

“…They demonstrated that many authors (Beattie et al, 2001;Humphrey, 2008;Power, 2003) have strongly criticised the current approach to audit research, which is predominantly quantitative and focused on testing the validity of hypotheses which, as Gendron (2006) pointed out, are often removed from the realities of auditors' practice. Commentators have criticised current audit research as having accomplished little in bridging the knowledge gap in 'audit technologies' (Hopwood, 1996;Humphrey & Moizer, 1990;Jeppesen, 1998), and critiqued the ways in which professional audit work, competence and skill are constructed and reproduced across countries (Cooper & Robson, 2006).…”