Auditors and Corporate Governance: A Qualitative Study in Polish Public Companies

Abstract

In the aftermath of major accounting scandals at the beginning of the century, significant reforms of the responsibilities of management, external auditing and corporate governance have been undertaken. A number of studies have examined the experiences of various actors (management, audit committee members, auditors and internal controllers) with corporate governance. This study is a direct response to the call for studies outside the Anglo-American model. It examines auditor’s experiences with CG in the setting of a two-tier board system and a capital market characterized by high ownership concentration. Fifteen auditors from international and local audit firms providing audit services for companies listed on Warsaw Stock Exchange participated in the study. The auditors indicate that the corporate governance environment has changed to some degree in the recent years. Corporate Governance mechanisms, effective audit committees and internal controls are often implemented in the best and biggest companies, mainly those with foreign investors. At the same time, auditors report only some reliance on corporate governance information in the planning phase and no reliance in the field-testing or review phases. The findings differ from those of prior studies (e.g., Cohen et al., 2010), in which auditors reported far greater reliance on corporate governance in all phases of the audit process. The two possible reasons for this difference in findings could be the different stages of the development of the respective capital markets and/or the different corporate governance systems.