حرفه حسابرسی جهانی و معماری مالی بین المللی : درک روابط قانونی در زمان بحران مالی

This paper explores how regulatory relationships in the global audit arena are being affected by the current financial crisis. Key policy initiatives and debates are analyzed, along with institutional interactions, in particular between the International Federation of Accountants (IFAC), international regulators and the large audit firms. The events are placed in the context of the new international financial architecture which has developed over the last decade. Using the illustrative lens of bank auditing, questions are asked of the nature and status of audit practice and the regulatory arrangements governing such practice. The paper shows the active nature of the regulatory responses to the crisis and the shifting and competing influences among key regulatory and professional participants in the global audit arena. Emphasis is placed on the need for audit researchers to be sensitive to the developing global financial architecture, and its potential implications for the study of audit practice in different national and international contexts.

The current global financial crisis has proved to be a particularly interesting one from the perspective of auditing. At one level, attention has been drawn to the limits and limited capabilities of auditing, the need to reform aspects of practice and regulation – including placing further constraints on the (non-audit) services provided by auditors and the relative silence of the profession at such a fundamentally important time (see Sikka, in press). However, at another level, the crisis has proved distinctive in that the typical questioning in the aftermath of major banking collapses as to ‘where were the auditors?’ has been less prevalent than in the past. The many regulatory and government reports now published on the financial crisis acknowledge that its causes lie in the interaction of a range of complex and global factors (e.g., see De Larosiere, 2009; Ricol, 2008; Treasury Committee, 2009). Criticism and blame has focused primarily on individual banking institutions and the strength of their management and business models, remuneration structures and incentive based cultures. The financial regulators and credit rating agencies have also found themselves subject to serious questioning, but auditors have largely escaped critical comment and the apportionment of blame. Indeed, the profession has been able to respond, in some jurisdictions, to criticism by relying on official assurances by independent oversight bodies as to the general quality of audit work (see AIU, 2008) and declarations, by senior international regulators, that the auditing profession appears to have had ‘a good crisis’.1 This paper does not concentrate on the causes of the current financial crisis and where blame should or should not be apportioned (for a discussion of the relative merits of this, see Miller, 2008). Rather, it delves behind a claimed ‘silence’ by the profession to highlight the scale of ‘behind-the-scenes’ activity and policy responses on the part of the auditing profession. In this regard, the paper’s contribution is threefold. Firstly, the paper stresses the importance of studying auditing within its context – and, how nowadays, this increasingly means researching auditing within the context of what is commonly known in the field of global governance, as the international financial architecture.2 In particular, it is argued that audit researchers need to be aware of (a) the wide range of institutions (and individual key players within them) with whom the auditing profession interacts in the global sphere and (b) the ways in which such bodies and interactions increasingly set the boundaries for both audit practice and the ideas and thought processes that shape practice. Secondly, the paper takes a number of components of the current global financial crisis and the associated regulatory response to highlight the potential challenges that it provides for the external audit function. Lastly, using the specific example of bank auditing, the paper pinpoints key questions that can be asked both of current practice and the path that future developments in practice may take. Such questioning is undertaken from the perspectives of audit practitioners, researchers and regulators; encouraging more open and visible dialogue (and the establishment of the contextual circumstances that will permit such dialogue) on the nature, capacities and achievements of audit practice.

This paper has explored the developing relationship between auditing and global financial regulatory structures in the context of the global financial crisis. Like others (e.g., Sikka, in press), we were intrigued by the apparent lack of visible questioning of the audit function in the midst of the current crisis, but it quickly became very evident that silence did not mean inactivity, nor an intent to preserve the status-quo. The analysis of institutional interactions, policy initiatives and debates made here, reveals that there has been an active regulatory response to this crisis. In considering the auditing profession’s response to the current global crisis, we have given a flavour of the continuing significance of negotiating and agenda framing activities on the part of the profession – but also highlighted a number of important, new dimensions regarding the global context within which the audit function operates. Tracing the rise of an international financial architecture and the position of audit within such structures is of real value in opening up new lines of investigation in relation to audit regulatory systems. We would suggest that the global ascendancy of the large multinational audit firms raises questions as to the extent to which self-regulation is re-emerging in a modified form of regulatory partnership between the firms, public oversight boards and the larger national accountancy bodies. There are questions to be asked of the status of auditing, the developing skill sets of auditors and the extent to which their capacity to exercise professional judgement is being enhanced and/or unduly constrained by global regulatory arrangements. More generally, there are avenues to explore with respect to the precise ‘interests’ being served by the pursuit of global audit standard setting in the ‘public interest’. It is evident that regulatory outcomes will be the product of shared and negotiated positions on the part of influential national and international players. As Jane Diplock, the current chair of IOSCO’s governing Executive Committee, recently observed: “It is my belief that a series of closely networked solutions will be developed and these solutions will require the cooperation of all major players in the global financial architecture as well as commitment at national jurisdictional level. To be effective these solutions will require high sets of robust global standards constantly updated to reflect market changes, effective enforcement capacity across borders and watchful eyes and actions across the world on stability issues.” (see http://www.sec-com.govt.nz/speeches/2009/260509.shtmls) It is also clear that regulatory practice and accompanying ‘solutions’ still have momentum. In November 2008, Mario Draghi, chairman of the FSF/B, presented his: “Vision of a more resilient global economy” in the Financial Times. He discussed how many of the weaknesses currently seen in the global economy came from “gaps and inconsistencies in regulatory regimes” and that it was necessary to “review and extend the regulatory perimeter to ensure that all financial activities are subject to adequate transparency standards and safeguards where they pose material risk… A large number of national and international bodies have reoriented and coordinated their work agendas to develop and implement necessary changes” (Draghi, 2008). While the auditing profession may take some comfort from such viewpoints and the relative lack of criticism of auditors in relation to the current crisis, there are some looming danger signs, with longer term significance, for the profession. Some regulatory reports suggest that audit is losing its relevance and/or is something that functions best in stable, financial times. Others are proposing new and potentially very challenging roles and responsibilities for auditors and, in the case of the G20, looking for the expansion of international accounting and auditing systems in countries where the supporting infrastructure is not likely to be very strong (see Hegarty et al., 2004). Legal cases against auditors are also starting to appear (with accompanying fears for the viability of the big audit firms36) – most notably the $1billion lawsuit filed by the liquidators of the failed sub-prime lender New Century against its auditors, KPMG for, allegedly, conducting “reckless and grossly negligent audits” that failed to reveal the lender’s financial problems. It has often been said that a crisis is a good opportunity for studying the particular significance and impact of the audit function, not least because it is a time when values and the raw edges of practice are most apparent (see Cooper, Everett, & Neu, 2005). Significantly, studies of auditing at a time of crisis have revealed the negotiated nature of auditor responsibilities and the sheer degree of effort undertaken by the profession in responding to crisis (see Fogarty, Heian, & Knutson, 1991). They have also cautioned against assuming that crises routinely address distinctive problems and propose new solutions, demonstrating the longevity and relatively static nature of phenomena such as the audit expectations gap (see Chandler and Edwards, 1996 and Humphrey et al., 1992). However, if we are looking at a global regulatory future oriented around practice, then it is important to study not only the institutions delivering that practice, but also those monitoring and shaping its boundaries – including the practice of audit oversight and associated corporate governance contexts. Above all, a consideration of the international financial architecture and developing nature of audit regulation has a valuable sensitising effect – emphasising the importance of not relying on overly one-dimensional perspectives of audit practice and its regulation. It also demonstrates the inter-related and overlapping nature of questions of audit practice, research and public policy. The global audit regulatory arena is a complex, intricate and shifting domain and one that is often absent or poorly depicted in audit regulation papers. In this regard, we concur strongly with the call by Cooper and Robson (2006) and others (e.g., see Kerwer, 2005 and Richardson, 2009) for more studies of global regulatory sites and relationship networks. The capacity for debate in academic auditing circles continues to demonstrate that the subject is a substantially more interesting field of inquiry than stereotypical images of auditing would suggest. There exist quite contrasting stances as to how much is known about audit quality and the work processes, practices and cultures serving to deliver and/or constrain the provision of quality audits (e.g., see Francis, 2004, Humphrey, 2008 and Power, 2003). There are divergent views over the strength and achievements of audit regulation – including whether the faith placed in auditor independence and supporting regulatory provisions governing the services provided by auditors is fundamentally flawed; and whether public oversight regimes are enhancing understanding of audit practice or hindering practice innovation (e.g., see Bazerman et al., 2006, Lennox and Pitman, in press, Moore et al., 2006, Nelson, 2006 and Robson et al., 2007). There are competing claims as to whether the global promotion of Anglo-American audit methodologies is bringing much needed transformations in processes of corporate governance or undermining the capacity to learn from valuable, but less visible, governance traditions. Similarly, there are wide-ranging discussions as to whether the pursuit of greater international convergence in audit practices is serving the interests of global capital markets, more broadly defined notions of ‘public interest’ or, simply, the self-interests of the auditing profession. In calling for the global audit regulatory arena to be given more research consideration, it is crucial to recognise that it is not a static phenomenon – but a world that shifts and changes depending on active pressures and interests. A number of the questions raised in this conclusion could well be answered differently depending if they were asked in the context of a developed or developing nation, or asked to an international or local firm, an audit practitioner or regulator, an international standard setter or a national professional body. Undoubtedly, there are benefits to private and informal discussions behind closed doors. But at the same time, we certainly need more publicly available and accessible knowledge of the workings of international audit practice, the regulatory networks, the forces driving global regulatory policy and its impact at the level of practice. We also need to recognise practice, research and policy as integrated components of activity and thought. To do otherwise runs the risk that practice development becomes unduly dependent on the exercising of sectional interests, mythical beliefs and convenient ‘reinterpretations’ of history.