ABSTRACT

This study investigates the role of auditor independence in ensuring financial reporting quality, comparing Big Four and non-Big Four audit firms over five years. Auditor independence is crucial for maintaining credible and reliable financial statements, fostering stakeholder trust. The Big Four—Deloitte, PwC, EY, and KPMG—are known for extensive resources and high audit standards, whereas non-Big Four firms, often smaller, face distinct challenges in maintaining independence. The research combines quantitative data from financial reports and audit firm databases with qualitative insights from interviews and surveys with auditors, financial analysts, and corporate executives.

The analysis reveals significant differences in how Big Four and non-Big Four firms manage and perceive auditor independence. Big Four firms generally maintain higher independence due to stringent controls and significant investment in training. However, some non-Big Four firms also exhibit strong independence through rigorous ethical standards and closer client relationships that do not compromise objectivity. The study underscores the importance of auditor independence for high-quality financial reporting and concludes with recommendations for policymakers and audit firms on promoting and sustaining auditor independence to ensure the integrity of financial reporting.