During 1990-2020, the global auditing/accounting and management consulting industry sectors experienced significant structural changes which have had un-even effects among large, medium and small auditing firms. The first section of this chapter summarizes the structural changes. The second section summarizes the antitrust problems. The third section discusses some of the climate-change and environmental pollution problems that are significantly affected by regulation of accounting firms and consulting firms; and introduces new solutions. In many countries, accounting firms have the primary responsibility for auditing firms' compliance with mechanisms such as emissions credits, environmental/sustainability accounting and compliance with environmental regulations; and consulting firms (by advising boards-of-directors and senior executives) informally and substantially influence firms' policies and procedures pertaining to waste/pollution and climate-change. The topics of the three sections (structural change, antitrust and the auditing/consulting firms' role in external audits and strategy pertaining to pollution, climate change and waste-management) are linked and or can have symbiotic effects on each other.
TopIntroduction
Accounting and management consulting are the most global/international of all professional services, and critically affect how international trade is conducted, recorded and its disputes resolved; and also affect the efficiency of emissions-management systems and corporate compliance with pollution/emissions policies and regulation. The World Trade Organization (WTO) Working Party on Professional Services and the General Agreement on Trade in Services (GATS) has made the global accounting sector a priority; and WTO’s deliberations also cover Sarbanes-Oxley Act (SOX) and similar statutes in other countries (which often apply to companies involved in cross-border finance and or business). The standardization/harmonization of accounting and auditing regulations and management consulting practices across countries, and market-access for foreign accounting and consulting firms remain important elements of International Trade negotiations and Sustainability management systems around the world. See the comments in White (2001), WTO (2017) and Cattaneo, Engman, Saez & Stern (2010). Thus, issues that pertain to audit-fees, management consulting fees, auditor/consultant-work-allocation Mechanisms and Auditor-liability-allocation Mechanisms can have significant direct effects on international trade and international capital flows, and compliance with environmental/climate policies and regulations; and can have indirect effects on international capital flows (mostly of auditee-companies and consulting clients). Some of the structural changes in the accounting and management consulting sectors are driven or affected by International Trade.
Accounting Biases is relatively new line of research and has been studied from Behavioural Accounting, Management Science2 and Operations Research3 perspectives. Chen & Jorgensen (2018) noted that accounting Biases can affect competition and Industry Structure in various non-accounting industries (which in turn, affects auditing and consulting processes). Marquardt & Zur (2015) found evidence that financial accounting quality is positively related to the efficient capital/resource allocation in economies.
TopComplexity And Structural Changes In The Global Auditing/Accounting And Consulting Industry
In this context, elements of complexity arise in various ways including but not limited to the following: