Independent auditing is essential in public accounting world and to society as a whole. The independent auditor acts as a “gatekeeper” between businesses and society. It is their job to ensure that the information they allow through their gates is objective and verifiable. When the information is not, it can lead to disastrous results. Three cases in particular in which this was evident are Enron, Tyco International and WorldCom. In each situation the independent auditor was compromised by conflicting interests and it led to catastrophic results for not only the auditors and their firm, but society as well.
Conflicting interests must be dealt with very quickly. Whenever there is a potential for a conflict of interest, there should be a policy in place that immediately quells any issue. This policy starts with the Sarbanes-Oxley Corporate Reform Act of 2002. This is a step in the right direction. However, I believe that it does not take measures far enough. Although the Act was good for conflicts of interest on a firm level, there must be stronger policies in place for the conflicts of interest that occur on an individual level. In addition, these policies must be continually adapted and modified in order to combat changing risks. That is a major issue with conflicting interests; the problem is constantly changing so it is an immense amount of work to keep policies up to date to combat it. However, even with the amount of work, I believe that with the correct policy reforms, auditors can ensure that nothing fraudulent will ever pass through their gates into society.