Privatization: The Road to Federal Regulation of Auditing

The federal government is shifting audit and regulatory investigatory activities from its own departments and agencies to independent CPA firms. This transfer provides independent CPA firms with new opportunities for practice development, but they may be realizable only at the expense of the profession's long-standing objective of self-governance. The Single Audit Act of 1984 is causing a profound change in the relationship between the auditing profession and the federal government. The act has given the federal government the authority to, among other things: 1. establish rules of conduct for both individual auditors and audit firms, 2. establish educational and other proficiency requirements for individual auditors, 3. establish practice and peer review standards for audit firms, and 4. specify the nature and extent of audit tests and procedures. Although initially restricted to state and local governments, the Single Audit Act is being extended to private sector organizations as well.