Int. J. of Accounting and Finance   »   2011 Vol.3, No.1



Title: Is there a difference between well-informed laypersons' and auditors' perceptions of auditor independence? Hong Kong evidence


Author: Philip Law, Adrian Lei


Department of Accounting, L214, Faculty of Business Administration, University of Macau, China.
Department of Finance, L212, Faculty of Business Administration, University of Macau, China


Abstract: Perceptions of auditor independence have become fundamental to public confidence in financial reporting and audit assurances. The lack of research on this issue in the Hong Kong auditing environment motivates the empirical study. The enactment of appropriate auditing standards in the marketplace could suitably serve the public interest and regulate the profession. Results show that provision of non-audit services (NAS) and high competition could have a negative affect on perceptions of independence. There is no difference in perception ratings between CPA-certified auditors and trainee auditors. Auditors perceive that NAS provision has a significantly more adverse influence on independence than laypersons do. Results imply that the theory of audit expectation gap still exists in the post-Enron audit environment. The Hong Kong regulatory body should consider professional reforms, such as the prohibition of NAS. Internationally, the study would be of interest to those doing business in China and Hong Kong.


Keywords: auditor independence; non-audit services; NAS; expectation gap theory; well-informed laypersons; auditors; Hong Kong; perceptions; public confidence; financial reporting; China.


DOI: 10.1504/IJAF.2011.042222


Int. J. of Accounting and Finance, 2011 Vol.3, No.1, pp.87 - 107


Available online: 31 Aug 2011



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