The report of the special committee of the Enron board describes a company without effective controls, where auditors and lawyers approved transactions that they should have known were improper.
ACs whose members are independent, are members of several boards of directors and who possess few company shares are more effective protecting the auditor's independence (Carcello and Neal 2003).
Besides, previous research concludes that ACs whose members are independent, members of several boards of directors and who possess few company shares are more effective protecting the auditor's independence (Carcello and Neal 2003), there is also evidence of a positive market reaction to the appointment of a director with financial experience to its AC (Davidson et al. 2004).
In the absence of effective competition and regulation, auditors continue to reduce the time they devote to an audit assignment.
Further tests reveal that providing tax confirmation services moderates the association of tax certified individual auditors with effective tax rates.
Concerning investors, however, it remains an open question how investors, as rational decision-makers perceive the association between tax certified individual auditors and effective tax rates.
To get a better understanding of the association between tax certified individual auditors and effective tax rates, I examine in further tests whether knowledge spillover effects may be also relevant for the associations found so far.
Accordingly, the research design chosen may also suffer from different observable and unobservable factors that could affect the association found between tax certified individual auditors and effective tax rates.
However, these studies do not provide any evidence on the association between individual auditor and effective tax rates.
More important, though, is an independent frame of mind, and most boards tend to crush that rather than encourage it.In the absence of adequate internal policemen, what other system of auditing the auditors might be effective?
