Why an auditor can't be competent and independent: A french case study

Abstract

This research proposes an understanding of the role of the relationship between the finance director and the auditor in the audit process and its effect on audit quality. We adopt an interpretative and qualitative approach. Based on 60 interviews, this qualitative method is the object of an interpretative process, composed of two complementary theoretical fields: contractual economic theories and economic sociology. Two notions emerge from this process, which are considered as the interpretation bases: relationship dualism (professional/personal relationship) and hybrid trust. This interpretative conception leads to a redefinition of the relationship between a finance director and an auditor as a peers' relationship. The emergence conditions of a peers' relationship are the sharing of professional and cultural norms, the frequency of relationship and the multiplexity of relationship. A peers' relationship is characterised by a hybrid trust, a joint generation of knowledge and a role equality. This parity conception of a relationship leads to a new reading of the foundations of audit quality that are auditor independence and competence. Audit quality appears as a balance between its two determinants, competence and independence.

Acknowledgements

The author would like to express her gratitude to Michael K. Power for his most helpful suggestions during her research work. The constructive comments by seminar participants at the London School of Economics, the 2001 Workshop on the Future of Audit and the Profession and the two anonymous referees are gratefully acknowledged. This contribution has been supported, in part, by a research grant from the Compagnie Nationale des Commissaires aux Comptes (C.N.C.C.).