The independence of Maltese sole practitioners : an assessment

Abstract

Purpose - Independence is one of the pillars on which the reputation of auditors should be built. In a recent publication concerning the future of the profession, independence was identified as required to be the unshakeable bedrock of the auditing environment. The purpose of this study is to investigate the perception, application and implications of auditor independence on Maltese sole practitioners. Design - A questionnaire was designed and mailed to sole practitioners. The response rate was that of 26 participants out of a sample of 77 full time sole practitioners who provide auditing services. Factors relating to independence, the provision of non-audit services to assurance clients, long association with the assurance client and financial dependency were investigated. Findings - The findings that emerge from this study indicate that sole practitioners are following independence requirements, whereby the Code of Ethics was identified as being the main source of reference. It was also discovered that in general, the respondents adopt adequate safeguards. Conclusions - The study carried out has demonstrated that independence requirements are a major concern to sole practitioners to abide with given their inherent limitations. However, it was noted that sole practitioners are doing their best to follow independence rules. Implications/Value - The study provides information on the effect of independence requirements on sole practitioners. This is the first time that this type of research has been conducted at the University of Malta and therefore it can serve as a benchmark to evaluate the effect of independence requirements on sole practitioners should future amendments be required.