2. Regulatory and Ethical Framework for Statutory Auditors’ Independence: A Review in Select Countries including India

In this chapter, the main objective is to conceptually review the regulatory framework for statutory auditors in select countries that make a significant contribution to world GDP. The focus is on the requirement that these auditors be independent. The countries selected are the USA, the UK, China, India and Germany. A comparative study of their regulatory structures is made based on certain parameters. In each of these countries, the regulatory structure is monitored by central government, professional institutes, financial market regulators and, in some cases, a separate audit regulator. These regulatory bodies issue pronouncements in the form of company law, professional regulation, codes of ethics, and auditing and quality control standards which establish the basic guidelines within which a statutory auditor must operate. In all of these regulations, the independence of statutory auditors is predominant. The enforcement of existing regulation is made through continuous inspections or prompt disciplinary action.