Handbook of Key Global Financial Markets, Institutions, and Infrastructure

Chapter 32

Justifications for Audits of Financial Statements

A. Brown^* and J. Ronen^†

^*Harvard University’s Edmond J. Safra Center for Ethics, Cambridge, MA, USA

^†New York University, New York, NY, USA

Outline

Introduction

Justifications for Financial Statement Audits

The Justification for Government Intervention into Auditing

The Implementation of External Audits

Auditing After the Securities Acts

The Structure and Growth of the Industry

Competition Rules Change in the 1970s

Modern Firm Structure

Competing Incentives for Firms in the 1990s

Sarbanes–Oxley Act of 2002

The Future of Auditing

References

Introduction

The financial statement audit is an integral part of modern business practice worldwide. The industry that performs the service ...