The UK’s framework approach to auditor independence and the commercialization of the accounting profession

This paper examines how the UK Chartered Accountants Joint Ethics Committee’s (CAJEC) 1996 Statement Integrity, Objectivity and Independence , which was developed at a time of mounting levels of criticism of the auditing profession, provides legitimization for the accounting profession’s increased commercial activities, particularly in the area of other business services. Parallel with a major shift in the nature of the activities of the professional firm, this ethics Statement gives expression to changes in the profession’s concept of independence. It adopts a more accommodating method for evaluating the adequacy of an auditor’s independence, introducing a “framework” approach in contrast with its predecessor’s “rule book” approach. Both the Statement and respondents to the preceding Consultation Papers support the flexible system afforded by the framework in terms of promoting clients’ economic interests. Moreover CAJEC’s proposals did not include any initiatives to promote audit firm transparency which might have enabled external monitoring of compliance with the framework. Thus, while the Statement does place some limitations on the flexibility of the framework and retains the distinction between audit and other activities, it ultimately embodies a notion of independence that is at one with the interests of the profession.