Discussant's response to auditor independence: Its historical development and some proposals for research;

              Discussant's Response to
Auditor Independence: Its Historical Development And some Proposals for Research
LeRoy E. Kist
Ernst & Ernst
Glen Berryman's paper conveys to me a very clear impression of the thought­ful
sifting of voluminous source material to present a comprehensive yet concise account of the evolution of the independence concept. By contrasting the actions of the AICPA with the actions of Congress and the Securities Exchange Commission and with the English background, he has brought the reader up to date so that he can at least begin to understand and appreciate the problem of independence and to consider the possible need for further research.
In his book The CPA Plans for the Future John Carey stated, "From the beginning, independent auditors have recognized that they would be useless to society unless they were fair and objective in their attestations to financial data . . . The assumption that auditors must be independent was taken for granted." Independence in an abstract sense may have been taken for granted but certainly a precise definition of independence and the specifics of its imple­mentation
could not be taken for granted. Development of the independence concept obviously didn't come easy and I am inclined to believe that there was, in part, some effort by the American Institute to accommodate a dual standard that would permit the practitioner's occasional financial interest, or other close relationships, in his closely-held client. We have come a long way from the tainted independence of the twenties, and with the adoption of the revised Code of Professional Ethics as of March 1, 1973, I hope that we do not have too much further to go.
Questions for Further Research
Glen has asked five basic questions which, he proposes, should be subjected to further research. The questions relate to the following principal issues:
1. Appointment and discharge of auditors.
2. Relationships between client and auditor that are likely to impede the exercise of impartial, unbiased judgments.
3. Payment for audit services rendered.
4. Reviews of auditor work, including audit independence.
5. Measurement of independence in fact.
In addition, he has asked questions which, if answered, could help in improving the appearance of independence which, we must acknowledge, is of some con-
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