The quest for quality financial information



In 2002, American energy giant Enron declared bankruptcy, in what was the largest bankruptcy in United States history.

The resulting scandal also brought into question the role of auditors from Arthur Andersen, who were accused of destroying thousands of paper and computer documents related to the Enrond audit. Has this episode changed financial auditing practices in North America? That was the question asked by Marion Brivot and Mélanie Roussy, researchers in the Université Laval School of Accounting.

Auditors do not spontaneously mention the public interest when questioned on the quality of their work, except in the wake of a major crisis such as Enron.

They found that auditors do not spontaneously mention the public interest when questioned on the quality of their work, except in the wake of a major crisis such as Enron. They are more concerned with their compliance with regulatory requirements and the fear of a possible inspection by their professional order or the Canadian Public Accountability Board. In other words, they see quality primarily as a means of protecting themselves from "reputational risk", and focus on producing nice safe audits, well-documented and beyond reproach.

In doing so, they have to some extent lost sight of the goal of protecting the public. Does this have negative consequences on the financial information made available to the public? It would be interesting to see further research into this question, which is likely to have significant socio-economic impacts.

In particular, these results could be used by Québec legislators in the context of the reform of the legal and regulatory framework for auditing following the fusion of Québec's three accounting orders.