Perceived auditor independence factors in Uganda
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Date
2017
Authors
Kaawaase Kigongo, Twaha
Korutaro Nkundabanyanga, Stephen
Journal Title
Journal ISSN
Volume Title
Publisher
Makerere University Business School
Abstract
Purpose – The purpose of this paper is two-fold: the first is to establish whether, in the face of the
company-pay model, financial statement preparers perceive threat and enhancing factors of Auditor
Independence (AI) the same way as users and external auditors, then secondly to model AI factors
in Uganda.
Design/methodology/approach – A two-methods approach is used which comprises, use of a oneway
ANOVA where the independent variable (AI factors) is measured using different participants or
groups (preparers, auditors and users) to examine the differences in opinions between the groups,
and confirmatory factor analysis technique of structural equation modelling to achieve the two-fold
objective. We use a self-administered survey questionnaire to accountants in Uganda involved with
entities’ financial statements as preparers, external auditors or users to collect data.
Findings – There are significant differences in opinions of the preparers and the other stakeholders
(users and auditors) regarding non-rotation of audit firm, staff and partners and, board control of
appointment and remuneration of auditors; as AI undermining factors. The preparers opine that
failure to rotate auditors and the control of auditor appointment and remuneration by the board is
more AI constraining, relative to the opinions of both the auditor and user regarding these factors.
Financial statement preparers were more concerned than auditors and users that failure to rotate
auditors and the control of auditor appointment and remuneration by the board impairs AI. A sixdimensional
model of AI undermining factors was fitted and a five-dimensional model best fitted for
AI enhancing factors.
Practical implications – The paper provides two models that can be used by accountancy bodies or
other stakeholders as a starting point in improving/or evaluating AI in developing countries.
Originality/value – This study is representative of key parties on the demand and supply sides of the
audit services market, auditors, financial report preparers and financial report users. It thus extends
the frontiers of knowledge on critical factors affecting AI in a developing country context and has
implications for theory, policy and practice.
Description
Research paper
Keywords
Auditor, Independence, financial statements, Developing country, Users
Citation
Kaawaase,K.T.,Korutaro, N.S.(2017).Perceived auditor independence factors in Uganda.