The trick is to ensure the incentives for the auditors are correctly aligned and to monitor the effects.
For example corporate auditors are paid by the company they're auditing and often actually make all their money providing other services to that same company. Guess how that works out (or read about Enron if you need a hint)
On the other hand I'd say something like the Paris MOU works. The inspectors (they're doing inspection not auditing, although the things they're inspecting are supposed to have already been inspected by the Flag State, so in another sense they're just checking that work) work for the Port State, so their interests aren't directly aligned with the ship owner and it makes sense to hold some vessels, but on the other hand, your ports aren't making money when they are full of ships being inspected or held for defects, so you don't want to go crazy.
One thing I particularly like about the Paris MOU is that it uses statistics to drive feedback. If inspections find that, say, South African flagged vessels (thus supposedly already inspected on behalf of South Africa) are often non-compliant, that flag goes on the Grey List or the Black List and there are MORE inspections of South African vessels. This has two effects, it drives up the cost of choosing the South African flag for your vessels, discouraging you from choosing a flag with bad inspection regime whether because it's cheaper or to save on vessel upkeep - and it enhances the ability to monitor other vessels that might fail too. On the other hand if say, South Africa is doing a great job, any time you inspect a South African flagged vessel it's like it just came out of the factory and every crew member is a world expert who is wide awake and handsomely paid, then South Africa goes on the white list and fewer of their vessels get inspected.
For example corporate auditors are paid by the company they're auditing and often actually make all their money providing other services to that same company. Guess how that works out (or read about Enron if you need a hint)
On the other hand I'd say something like the Paris MOU works. The inspectors (they're doing inspection not auditing, although the things they're inspecting are supposed to have already been inspected by the Flag State, so in another sense they're just checking that work) work for the Port State, so their interests aren't directly aligned with the ship owner and it makes sense to hold some vessels, but on the other hand, your ports aren't making money when they are full of ships being inspected or held for defects, so you don't want to go crazy.
One thing I particularly like about the Paris MOU is that it uses statistics to drive feedback. If inspections find that, say, South African flagged vessels (thus supposedly already inspected on behalf of South Africa) are often non-compliant, that flag goes on the Grey List or the Black List and there are MORE inspections of South African vessels. This has two effects, it drives up the cost of choosing the South African flag for your vessels, discouraging you from choosing a flag with bad inspection regime whether because it's cheaper or to save on vessel upkeep - and it enhances the ability to monitor other vessels that might fail too. On the other hand if say, South Africa is doing a great job, any time you inspect a South African flagged vessel it's like it just came out of the factory and every crew member is a world expert who is wide awake and handsomely paid, then South Africa goes on the white list and fewer of their vessels get inspected.