COMPETITION AND THE REGULATION OF AUDITOR INDEPENDENCE IN THE EC
| Published date | 01 February 1992 |
| DOI | https://doi.org/10.1108/eb024764 |
| Pages | 163-169 |
| Date | 01 February 1992 |
| Author | DEREK RIDYARD,JEAN DE BOLLE |
| Subject Matter | Accounting & finance |
COMPETITION
AND THE REGULATION OF AUDITOR
INDEPENDENCE
IN THE EC
Received: 16th November, 1992.
DEREK
RIDYARD
AND
JEAN
DE
BOLLE
DEREK
RIDYARD
IS
A SENIOR CONSULTANT WITH NATIONAL
ECONOMIC
RESEARCH ASSOCIATES (NERA) IN
LONDON,
SPECIALISING IN UK AND EC
COMPETITION
POLICY
JEAN
DE BOLLE
IS
AN ANALYST WITH NATIONAL ECONOMIC
RESEARCH
ASSOCIATES (NERA) IN LONDON
WHERE
HE SPECIALISES IN ECONOMIC
REGULATION.
NATIONAL
ECONOMIC RESEARCH ASSOCIATES
(NERA)
IS A FIRM OF CONSULTANTS
SPECIALISING
IN THE APPLICATION OF
MICROECONOMICS
TO A RANGE OF
COMPETITION,
REGULATORY AND PUBLIC
POLICY
ISSUES.
NERA HAS OFFICES IN
LONDON,
MADRID AND ACROSS THE USA.
ABSTRACT
The
paper
sets
out the findings of a study
by
the
authors
of
the
EC audit and
consul-
tancy
sectors,
presenting
their view that it
is auditors' independence rather than
competition which provides those con-
cerned
with
regulation
of
the
industry
with
the
most
urgent public
policy
issues.
The authors consider the
approaches
adopted by EC Member
States
to
protect
auditors'
independence,
concluding that
these approaches
have a
limited
effect.
The
paper
closes
by proposing an alternative
approach
to
improving
assurances
of audi-
tors'
independence
which would
combine
independent
inspection
of audit
standards,
consumer demand for safeguards and
moves by suppliers to anticipate that
demand.
INTRODUCTION
At the beginning of 1990, we started
a year-long, in-depth study of the EC
audit and consultancy sectors. The
study was commissioned by the
Directorate for Competition Policy
(DG IV) of the Commission of the
European Communities (the Com-
mission) as part of its ongoing
research programme into competi-
tion within major sectors of the EC
economy.1
The study was prompted by a
number of separate public policy
concerns regarding accounting firms:
-
recent mergers between some of
the major firms had reduced cus-
163
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