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ACCA Applied Knowledge · Business and Technology · The role of regulatory and professional bodies in promoting ethical and professional standards in the accountancy profession

A country's government is considering replacing the self-regulation of auditors with oversight by an independent public regulator. Which of the following is the most likely argument in favour of the change?

The strongest argument is that an independent public regulator is separate from the profession, so it reduces conflicts of interest and increases public confidence. Technical expertise favours self-regulation, and lower cost is not guaranteed.

  1. AAuditors would be more familiar with technical issues, so standards would be set faster
  2. BRegulation would be independent of the profession, reducing the risk of conflicts of interestCorrect
  3. CThe cost of regulation would automatically fall for auditors and the public

Explanation

The main criticism of self-regulation is that the profession regulates itself and may favour its members. An independent regulator addresses this. Technical expertise is an advantage of self-regulation, and cost savings are not assured and often rise.

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