Auditor Independence in Appearance: An Examination of Perception Differences between Accountants and Non-Accountants

Using non-accounting business students as a proxy for general public and senior accounting students as a proxy for accounting professionals, this study investigates the effect of ten different independent scenarios dealing with auditors’ appearance of independence on the chance that the auditor will not report a material misstatement in the financial statements. The results show that there are significant difference between accounting and non-accounting respondents when the auditor has a material direct financial interest in the client, when the auditor’s family members have a material direct financial interest in the client, when the auditor’s next of kin has a key position in the client, or when the auditor receives a more favorable loan term from a car dealer through the client arrangement. We did not find any differences between male and female respondents with respect to their perceptions of the ten scenarios in this study.