Policies that cushion the dimension of pressures on independent auditor - Evidence from France
Carhuapoma Chacón, Gieme German
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Nowadays, one of the main concerns of organization is to report their financial statements in a timely and reasonable manner free from material misstatements. Because of the scandals in financial frauds, such as Enron or Tyco, legal rules and policies were developed to mitigate further risk of fraud. Thus, the shareholder requires the management to present thefinancial statements audited by independent firms, because the firms have a high degree of independence and objectivity that provides opinion free from pressure (self-interest, familiarity, intimidation, etc.). However, there are factors that can affect the auditors’ independence either pressure exerted by the audited company or pressures exerted by the auditing firms themselves.The purpose of this research is to examine how the organizational policies, cushion the different dimensions of pressure on auditor’s independence. This study adopts an interpretative approach and expands on the literature making an empirical analysis on interviews of 10 participants. For this purpose, data was collected from French companies and audit firms located in Paris. Findings in this investigation reveal that the practices, policies and regulations followed by both auditors and audited organizations presents a positive and significant impact on auditor’ independence, which in turn cushions the pressures on auditors. Overall, the dimensions that cushions the pressures on auditors are consciousness of pressure, reputation and experience of audit firm, interaction between the auditors and corporate governance, relationship between auditor and management, and negotiation betweenauditors and auditees.