ABSTRACT
The United Kingdom (UK) financial reporting system has conventionally been classified as one that relies primarily on professional self-regulation, where professionalism and flexibility are preferred to statutory control and uniformity (Gray 1988) and non-governmental rules are supported by professional enforcement (Nobes 1992). While this characterization does convey important points about the traditions and conventions of the UK system, the full picture on auditing regulation in any environment is normally much more complex than is implied by a simple classification between professional and governmental regulation (Puxty et al. 1987). A mixture of mechanisms contributes to regulation and it is the balance between complementary elements that creates the actual regulatory environment. That balance can also change significantly over time. This chapter discusses how recent changes in the regulatory framework in the UK have emphasized a transition to more independent regulation and resulted in an approach that no longer relies on professional self-regulation as the primary means of promoting reliable auditing.
