The auditing standards rather than implementing the existing standards

The letter “P” in CPA stands for public trust, as stated in the AICPA code of professional conduct: “Members should accept the obligation to act in a way that will serve the public interest, honor the public trust, and demonstrate commitment to professionalism” (AICPA, 2002a).

            Certified Public Accountants (CPAs) have earned and honored the public trust in their profession and should be proud of their legacy in serving the public interest. Sadly, a rising figure of financial restatements by major firms that are involved with bankruptcies brought about by financial statement fraud and associated audit failures, have hurt public trust in the accounting system and profession. Rebuilding the public trust needs a major united effort of all members of the accounting profession, including the American Institute of Certified Public Accountants, business community, public accounting firms, standard-setting bodies, CPAs, and educators (Rezaee, Z. (2004).  Melancon (2002) calls for a rejuvenation of the accounting culture by focusing on stronger fraud detection measures and improved financial reporting . Nevertheless, it is also very crucial to explore the implication of anti-fraud education, training programs, and auditing in improving the quality of financial reports and audit competence (Melancon (2002).

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            The groundwork upon which a stockholder’s trust is built is an audit of the financial statements by an independent auditor, however, many preceding years have revealed frequent holes in this foundation” (Schuetze et al., 2003). As a response, PCAOB take the lead in bringing back public trust in the accounting profession and hence maintaining it by: creating independence guidelines for auditors; setting up auditing standards rather than implementing the existing standards or delegating this role to the accounting profession; and investigating, monitoring, and disciplining the auditing profession rather than outsourcing the process to the profession (Schuetze et al., 2003).

            Recent financial crisis and failures insinuate an expectation gap between what the public expects of accountants and what accountants expect of themselves, as a consequence, it has produce a trust gap. Turner (2002) suggested that we must close the gap by changing what we deliver in the way of an audit, and to conform to the desires of our clients.”

            Closing the trust gap and improving public trust in the accounting system will take time and requires extensive measures and cooperation of legislators, regulators, standard-setting bodies, and the accounting profession. The Sarbanes-Oxley Act of 2002 was enacted to: improve corporate governance, the quality of financial reports, and the effectiveness of audit functions; provide new disclosure requirements for public companies; create an independent regulatory structure for the accounting profession; and establish stronger criminal penalties for securities fraud (Rezaee, Z. (2004).

            This public trust can be rebuilt and enriched by accountants and auditors by concentrating their core values of integrity, objectivity, independence, and competence. The increasing interest in and the demand for the improved corporate governance and accountability have created a unique and timely opportunity for accountants and the AICPA to align their strategic vision with the emerging demands for effective oversight of corporate governance (Rezaee, Z. (2004).

            Blackburn et al. (2010) suggest the following potential trust determinants; that trust is built via an on-going relationship, principally through the provision of conformance or compliance services, that it is built up over time through social rapport. The importance of empathy is also highlighted as vital to the success of the relationship and the provision of performance (or non-compliance) business advisory services (Blackburn et al., 2010).  

            “For decades, CPAs in public practice have laid a foundation of trust with clients by competently handling confidential financial data and performing core services such as tax preparation.” (Ferguson, 2012)

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