Contact: Dr. Doug Smith, Assistant Professor of Accounting, 205-726-4014, dusmith@samford.edu

Auditor independence: perception or reality?

Since the passage of the Sarbanes-Oxley Act (SOX) in 2002, the independence of both external auditors and company audit committees has received significantly increased attention. Recent research by Dr. Douglas Smith, assistant professor of accounting, and Frank Minter, executive-in-residence, examines the makeup of audit committees of companies as prescribed by enhanced regulatory requirements and in light of perception of interested parties. The study presents eight different real-life situations that raise questions about the perceived independence of members of audit committees of publicly traded companies.

"Given the tainted reputation of both corporate America and the public accounting profession, sensitivity to perceptions could make a major contribution toward improving their images . . . With all the current events that call into question the integrity of corporations and accounting firms, you might think that companies would err on the side of too much independence to avoid bad impressions," according to Smith and Minter.

The study was recently published in Strategic Finance, the flagship publication of the Institute of Management Accountants (IMA), the world's leading association for management accounting and finance professionals. Strategic Finance has a circulation of 64,000. This is the second article that Smith and Minter have published on the impact of the Sarbanes-Oxley Act.