The Market for Non-Audit Services: The Influence of Client Industry Audit Expertise

2006 ◽  
Author(s):  
Michael Kend
Keyword(s):  
Non Audit Services

scholarly journals Audit Fee Research on Issues Related to Ethics

2017 ◽  
Vol 11 (2) ◽  
pp. A1-A22 ◽  
Author(s):  
David C. Hay
Keyword(s):  
Audit Quality ◽  
Ethical Issues ◽  
Audit Fees ◽  
Preliminary Evidence ◽  
The Body ◽  
International Ethics ◽  
Ethical Problems ◽  
Audit Fee ◽  
Risk Areas ◽  
Non Audit Services

SUMMARY Audit fees are related to important ethical issues for auditors. There has been increasing research on audit fees recently, including research on potential ethical risks regarding audit fees, which helps to illuminate some of these professional issues. The International Ethics Standards Board for Accountants (IESBA) is very interested in this area and asked me to prepare a paper reviewing the relevant research. This summary reviews research that became available from 2006 to 2016 on four issues related to audit fees—fee level, dependence, non-audit fees, and firms that have a significant non-audit services business. Examining the research shows consistent evidence about two issues, namely that audit fees for new engagements are lower and that non-audit services affect independence in appearance. There are two further issues about which there is some concern. First, there are occasional studies reporting evidence that non-audit services provided by an auditor are associated with a loss of independence indicated by lower audit quality, even though most research does not support this conclusion. Second, there has been recent concern about growth in non-audit services to non-audit clients and there is some preliminary evidence that audit quality is lower in firms that have more extensive non-audit businesses. In general, although audit fee research does not convey a message that there are widespread ethical problems, the body of research shows that there are some risk areas.

The impact of audit reforms on objectivity during the performance of non-audit services

2014 ◽  
Vol 29 (3) ◽  
pp. 222-236 ◽  
Author(s):  
Richard G. Brody ◽  
Christine M. Haynes ◽  
Craig G. White
Keyword(s):  
Audit Quality ◽  
Content Type ◽  
Auditor Liability ◽  
Internal Auditors ◽  
External Auditors ◽  
Regulatory Perspective ◽  
External Auditor ◽  
The Impact ◽  
Practical Implications ◽  
Non Audit Services

Purpose – This research aims to explore whether recent audit reforms have improved auditor objectivity when performing non-audit services. Design/methodology/approach – In two separate experiments, the authors tested whether external and internal auditors' inventory obsolescence judgments are influenced by their client's (or company's) role as the buyer or seller in an acquisition setting. Findings – External auditors assessed the likelihood of inventory obsolescence objectively, regardless of their consulting role in the acquisition setting. Internal auditors assessed the likelihood of inventory obsolescence as higher when consulting for the buyer than when consulting for the seller, consistent with the supposition that the buyer would prefer to write-down inventory and negotiate a lower purchase price, whereas the seller would prefer the inventory not be written down. Practical implications – From a regulatory perspective, external auditors may be relying too much on the work of internal auditors if internal auditors' lack of objectivity as consultants extends to their assurance role. Originality/value – This paper extends prior research in the area of internal and external auditor objectivity and is the first paper to include both subject groups in the same experiment. It also addresses the current policy issues that may have a significant effect on audit quality and auditor liability.

Non-audit services and audit quality: evidence from Germany

2018 ◽  
Vol 14 (5) ◽  
pp. 959-1007 ◽  
Author(s):  
Daniela Hohenfels ◽  
Reiner Quick
Keyword(s):  
Audit Quality ◽  
Quality Evidence ◽  
Non Audit Services

scholarly journals EFFECTS OF AUDIT AND NON-AUDIT SERVICES FEES ON CORPORATE PERFORMANCE OF FIRMS LISTED IN PAKISTAN

2021 ◽  
Vol 9 (3) ◽  
pp. 864-876
Author(s):  
Muhammad Naeem Khan ◽  
Adnan Ahmad ◽  
Muhammad Asad Khan ◽  
Aziz Javed ◽  
Zia ur Rehman
Keyword(s):  
Corporate Performance ◽  
Stock Exchange ◽  
Panel Data Analysis ◽  
Secondary Data ◽  
Financial Statements ◽  
Audit Firm ◽  
Body Of Knowledge ◽  
Audit Fee ◽  
Unique Study ◽  
Non Audit Services

Purpose of the Study: The main purpose of this study is to examine the effects of the provision of audit and non-audit services jointly by the same audit firm on the corporate performance of firms in the capital market of Pakistan. Methodology: This study uses hand-collected secondary data taken from firms' financial statements, the Pakistan Stock Exchange (PSX), the State Bank of Pakistan (SBP) for 2012-2016. Panel data analysis techniques are employed using E-views statistical software. Main Findings: we find a negative relation between audit and non-audit services fees with the firm performance. It is also documented that the appropriate amount of the NAS fee exceeds the amount of the audit fee received by the same auditor in the same assignment. Application of the Study: This study has vital implications from both theoretical as well as practical perspectives. It adds a significant aspect of audit and non-audit services provided in the context of Pakistan to the existing body of knowledge/literature. This study also implies the bifurcation of audit services provision and its serious implications on the corporate sector of Pakistan. These results thus, signify its implications for regulators as well as standard setters in Pakistan. Novelty/Originality of this Study: Various studies covering the audit aspect have been conducted in Pakistan. However, this is a unique study covering the multi-facet dimensions of audit, i.e., audit and non-audit services provision by the same audit firm and its effects/implications on corporate performance in Pakistan.

scholarly journals The Relationship between Non-audit Services and Auditor Independence: Evidence from Chinese Listed Companies

2021 ◽  
Vol 4 (1) ◽  
Author(s):  
Xiaobo Hao
Keyword(s):  
Rapid Development ◽  
Binary Logistic Regression ◽  
Listed Companies ◽  
Auditor Independence ◽  
Binary Logistic Regression Model ◽  
Western Countries ◽  
Chinese Listed Companies ◽  
Independent Variable ◽  
The Relationship ◽  
Non Audit Services

The rapid development of non-audit services (NAS) has jeopardized the independence of auditors, which has led many Western countries to enact regulations that restrict the provision of NAS. While in China, NAS have just emerged, and its development in China is far less mature than in Western countries. The purpose of this paper is to explore whether NAS in China have damaged auditor independence and whether Chinese regulators need to emulate Western countries and strongly limit the provision of NAS. In order to achieve this objective, 213 Chinese listed companies are selected in this study. The audit opinions issued by the auditors are used as substitute variables for auditor independence (dependent variables), and the ratio of non-audit service fees to the total of audit service fees and non-audit service fees as a substitute variable for the provision of NAS (independent variable), and meanwhile some suitable control variables are also selected. Analyse these data by building a binary logistic regression model. The results show that there is no evidence in China that NAS can undermine auditor independence and there is no need for China to enact regulations to prohibit the provision of NAS.

scholarly journals The non-audit fee and the auditee’s failure risk

2018 ◽  
Vol 2018 (99 (155)) ◽  
pp. 97-118
Author(s):  
Piotr Staszkiewicz ◽  
Rumiana Górska
Keyword(s):  
New Zealand ◽  
Audit Fees ◽  
Audit Report ◽  
Financial Situation ◽  
The Third ◽  
Cross Border ◽  
Failure Risk ◽  
Audit Fee ◽  
Non Audit Services

This paper examines whether the auditee’s financial situation affects the auditor’s non-audit fee and independ- ence. Three sets of tests were used to address the issue. The first examines whether there are cross-border and intertemporal differences in relationships between non-audit fees and audit fees. The second tests whether there is a relationship between non-audit fees and report modification. The third addresses the relationships between audit fees and the auditee’s financial situation. The results suggest a lack of coexistence of all three motives for the purchase of non-audit fee services, and substantial similarities of auditor and auditee behaviors across Po- land and New Zealand. We documented the lack of a significant link between auditee failure risk and the quality of the audit report. Our findings indicate an operational rather than a strategic nature of non-audit services to incumbent clients.

Sign in / Sign up

Export Citation Format

Share Document