Browsing by Author "Deemay, Patrice"

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    An investigation of the state of auditor independence in small audit firms in Tanzania
    (University of Dar es Salaam, 2009) Deemay, Patrice
    Professional standards require auditors to be independent in the performance of attestation services. Critics of the accounting profession have expressed concern that pressure to maintain and develop business opportunities may erode an auditor’s objectivity and independence especially for small audit firms when making audit judgments. This study investigated the state of auditor independence in small audit firms in Tanzania. Four specific research objectives were developed. These were to assess the extent of auditor rotation in the small firms; to assess the proportion of the non-audit fee to total fee from a client: to examine the extent of price competition in the small audit firms and to assess the proportion of audit firm’s financial dependence from a client. Date was collected from fifty-four respondents comprised of; twenty small audit firms, four big audit firms and thirty client firms by using both close and open ended questionnaires developed for that purpose. Data obtained were analyzed quantitatively using the statistical package for social science (SPSS) especially frequency tables and percentages. The findings indicated that the rotation of audit firms/ partners in small audit firms seemed to the rarely practiced and hence their independence is in question. Also perceptions of auditor independence were statically significantly lower for the cases where the audit firms performed non-audit services in addition to audit service. It was also found out that small audit firms are influenced by their clients to reduce audit fees especially during initial engagement something detrimentally impair their independence. However, the assessment of small firm’s financial dependence over individual client did not indicate great impact. It is recommended that regulators set certain minimum number of partners to be able to undertake required audit rotation: also to limit the number of non-audit services to be offered by a firm to two or three only, and finally a compulsory formation of audit committee in the clients firms corporate structure.