Auditor Independence and the Scope of CPA Services: Roots and Recent Developments

The recent discoveries of capital market abuses and the unfolding of corporate scandals have led to the demise of Arthur Andersen as a member of the so-called Big Five auditing firms (Bartley 2002) and to significant changes in the scope of auditor services. The potential loss of credibility of the audit function, mandated for public companies as part of historic 1930s New Deal remedies for an ailing capital market, raises issues related to the governance of corporations and the proper conduct of parties using and seeking public investment funds.