ABSTRACT
In the wake of the worldwide financial crisis of 2008, the European Commission (EC) addressed the regulation of auditing through the issuance of a Green Paper that called for a review of the role of the statutory audit as well as the wider environment within which statutory audits are conducted (EC, 2010). The purpose of this Green Paper was to question whether the role of auditors could be enhanced to mitigate future financial crises. In particular, the Commission sought to address whether audits provide the right kind of information for participants in capital markets, whether there are issues around the independence of audit firms, whether there are risks linked to a concentrated market for audit services, and whether supervision at a European level might be useful. In addition to the EC’s Green Paper, various academic experts on the regulation of statutory auditing have argued that the reputation of corporate reporting has been in crisis (Quick, Turley and Willekens, 2007).
