Auditing in Britain and Germany compared: professions, knowledge and the state

Abstract

In an attempt to move away from dichotomous expositions of state-run Germany and self-regulated Britain this paper seeks to analyse the regulation of auditing in terms of a state-profession axis (Hopwood, 1988: 559) that shifts over time. Stereotypical beliefs of Britain and Germany representing diametrically opposite systems of regulation can be contradicted in the light of increasing state involvement in Britain and the recognition that the German system is not adequately characterized by rigid and exhaustive codification, but relies to a significant degree on professional expertise. However, differences do exist, especially in the nature of regulation, which takes an informal shape in Britain, and in the production and diffusion of knowledge where academics and preparers are much more involved in Germany. The case of auditor independence illustrates some of the similarities and differences exposed by an analysis that aims to interpret regulatory systems in their national and historical context rather than producing simplistic general models.