Perceptions of Auditor Independence and the Effects on the Perceived Reliability of Financial Statements in Ireland

  • Mary Christine Kilcommins

Student thesis: Doctoral ThesisDoctor of Philosophy


The purposes of this study were to examine the effects of six variables on auditor independence and the reliability of financial statements as perceived within the Irish commercial environment and to explore the reasons underlying these perceptions. The six variables comprised of audit firm size, audit market competition, audit committees, audit tenure, provision of nonaudit services (NAS) and client employment. From a combination of questionnaire and interview approaches, the study sought to obtain supportable and useful insight as to the perceptions held. The approach builds on and develops previous research conducted outside the Irish market. The results of the study showed that auditor independence and the reliability of financial statements were perceived to be significantly impaired when the audit was performed by a non-Big Six firm, the audit environment was highly competitive, no audit committee existed, audit tenure was long, NAS were provided by audit personnel to audit clients, and the auditor took up an employment position with a former audit client. Some of the reasons underlying these perceptions were as follows. The importance of reputation to, and. the international profile of, the Big Six firms allowed interviewees to have greater confidence in their independence. A highly competitive audit market was perceived to impair auditor independence by encouraging auditors to cut back on the amount of audit work performed in order to maintain audit fee income. Audit committees were perceived to enhance auditor independence by reducing the power that management could exert over the auditor. Long audit tenure was perceived to impair auditor independence by encouraging auditors to become cosy in their relationships with their clients. The lack of confidence as a result of NAS provision was associated with the audit firm's dependency on such services for fee income. Client employment was perceived to provide the ex-auditor with power to influence auditor-client relationships.
Date of Award1997
Original languageEnglish
Awarding Institution
  • Aberystwyth University
SupervisorDavid Robert Gwilliam (Supervisor)


  • auditor independence
  • financial statements

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