The EU law on auditing and the role of auditors in the global financial crisis of 2008

Abstract

In September 2011, the European Union Commissioner Michel Barnier explained that there are weaknesses in the way the audit sector works today and the crisis highlighted them. Such weaknesses were not detected for the first time: a few years earlier the problems of the audit sector emerged when Enron collapsed and the chicanery of its auditor Arthur Andersen was revealed to the markets. Since then, auditors and audit firms, namely, the Big Four have been subject to the long standing debates not only in the academic world but also in a number of European laws and regulations. This article examines the role of auditors in the global financial crisis of 2008 and whether they actually failed in their role.