Auditor Independence : Th e Voice of Shareholders

Controversy over auditor independence has raged in recent times, but little is known about what auditor independence means to the ultimate consumers of the auditors work. In New Zealand, the Institute of Chartered Accountants of New Zealand (called ICANZ) has held an inquiry into the issue (ICANZ, 2002, 2003), the New Zealand Stock Exchange has made changes to its listing requirements (NZX 2004), and the Securities Commission has undertaken a study and released a paper (Securities Commission, 2004). Th ere has been public discussion of what should be done by leading chartered accountants (e.g. Hagen, 2003), and other commentators (e.g. Robb, 2003). But what about the views of shareholders? Auditors’ reports on fi nancial statements are addressed to the shareholders. If new requirements for auditor independence are to be developed, it seems essential that the views of these important fi nancial report users are taken into account. Th is article reports a study that compared the views of shareholders to those of directors and auditors, using a survey of 178 members of the three groups.