AUDITORSâ€™ INDEPENDENCE: A STUDY OF INTERNATIONAL SCENARIO VIS-A-VIS INDIAN SITUATION
Auditors’ independence refers to the independence of the external/ statutory auditors. The basic definition of audit is ‘independent appraisal of accounts by third party’. Therefore, the two terms ‘audit’ and ‘independence’ are inseparable. Auditors’ independence is necessary not only for the purpose of obtaining assurance on the financial statements, but also to prevent financial misstatement/ fraud. The recent corporate scams in India and abroad have demonstrated that lack of auditors’ independence played a major role for occurrence of those scams. The lack of independence of the auditors is widely debated and it is very often questioned whether in actual practice there is independence or not. The auditor should be independent from the client company, so that the audit opinion will not be influenced by any relationship between them. The auditors are expected to give an unbiased and honest professional opinion on the audited financial statements presented to the shareholders of a company.
In the above background this paper tries to make a survey of the international scenario in respect of auditor-independence. This paper is divided into eight sections: 1: Introduction, 2: Research Methodology, 3: Objective of the Study, 4: Theoretical Framework of Auditors’ Independence, 5: International Scenario of Auditors’ Independence,
6: Indian Situation, 7: Conclusion 8: Limitations of the Study.
KEY WORDS- Auditor, Audit Opinion, Auditor Independence, International Scenario.