Regulation of Audit and Assurance

The need for regulation

The role of the auditor has come under increased scrutiny over the last thirty years due to an increase in high profile, economically damaging fraud cases. The most high profile case, and the catalyst for regulatory change, was the collapse of Enron and its auditor Arthur Andersen.

In order to try and regain trust in the auditing profession national and international standard setters and regulators have tried to introduce three initiatives:

• harmonisation of auditing procedures, so that users of audit services are confident in the nature of audits being conducted around the world;
• a focus on audit quality, so that the expectations of users are met; and
• adherence to a strict ethical code of conduct, to try and improve the perception of auditors as independent, unbiased service providers.

In order to achieve this practitioners now have to follow three sets of regulatory guidance:

• The Code of Ethics for Professional Accountants
• Auditing Standards, particularly International Standards on Auditing, and
• National corporate law including regulations regarding corporate governance.

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Tags:	Enron;Arthur Andersen;Code of ethics;ISA's