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Author: Nasrollah Ahadiat
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
Purpose - While a few US studies on the impact of the provision of non-audit services on auditor judgment have found potential harm to independence, it is the purpose of this study to investigate whether the British and Australian auditors' involvement with both audit and non-audit services for the same clients may also produce similar results.Design/Methodology/Approach - The parametric t-tests and the nonparametric Mann-Whitney tests are used in this study on the empirical data from the British and Australian companies to examine the potential for loss of independence when high levels of non-audit services are provided to audit clients.Findings - The results corroborated the US Securities and Exchange Commission's contention that the provision of non-audit services may indeed impair independence.Research Limitations/Implications - No attempts were made to isolate the effects of other factors that could result in the issuance of qualified opinions. In addition, the sample used in this investigation is comprised of firms that had voluntarily disclosed non-audit fees in the early years of the study. This could potentially introduce a self-selection bias. Nevertheless, this study is one of a kind in the international arena.Originality/Value - This paper extends the line of research examining the impact of non-audit services on the auditor's independence.
Author: Nasrollah Ahadiat
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
Purpose - While a few US studies on the impact of the provision of non-audit services on auditor judgment have found potential harm to independence, it is the purpose of this study to investigate whether the British and Australian auditors' involvement with both audit and non-audit services for the same clients may also produce similar results.Design/Methodology/Approach - The parametric t-tests and the nonparametric Mann-Whitney tests are used in this study on the empirical data from the British and Australian companies to examine the potential for loss of independence when high levels of non-audit services are provided to audit clients.Findings - The results corroborated the US Securities and Exchange Commission's contention that the provision of non-audit services may indeed impair independence.Research Limitations/Implications - No attempts were made to isolate the effects of other factors that could result in the issuance of qualified opinions. In addition, the sample used in this investigation is comprised of firms that had voluntarily disclosed non-audit fees in the early years of the study. This could potentially introduce a self-selection bias. Nevertheless, this study is one of a kind in the international arena.Originality/Value - This paper extends the line of research examining the impact of non-audit services on the auditor's independence.
Author: Sylvia Chai
Publisher:
ISBN:
Category : Auditing
Languages : en
Pages : 45
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Book Description
This study investigates whether auditors compromise their independence when they provide audit and non-audit services jointly to their clients. The relationship between the level of non-audit services fees and two independence-related measures: (i) the level of earnings management and (ii) the type of audit opinion issued, is examined. The results indicate that for Big 6 audited companies purchasing higher levels of non-audit services engage in higher levels of earnings management compared to companies purchasing a lower level of non-audit services from their incumbent auditor. However, the study finds that high level purchasers of non-audit services are not more likely to receive a clean opinion compared to low level purchasers of non-audit services. In order to explain the conflicting results, further tests are conducted to determine whether companies that purchase concurrently a high level of non-audit services and indulge in high levels of earnings management are more likely to receive a clean audit opinion. This is important since auditors will only be perceived as compromising their independence if they fail to issue qualifications when the level of earnings management is high. The findings indicate that no relationship exists between the type of audit opinion issued and the interaction between the level of non-audit service fees and the level of earnings management. Hence, it is concluded that auditors do not impair their independence in terms of willingness to issue deserved qualifications when providing joint services.00000 g.
Author: Richard M. Frankel
Publisher:
ISBN:
Category : Auditing
Languages : en
Pages : 44
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Book Description
We examine the association between the provision of non-audit services and earnings quality. Because of concerns regarding the effect of non-audit services on financial reporting credibility, the Securities and Exchange Commission recently issued revised auditor independence rules requiring firms to disclose in their annual proxy statement the amount of fees paid to auditors for audit and non-audit services. Using data collected from proxy statements filed between February 5, 2001 and June 15, 2001, we present evidence that firms purchasing more non-audit services from their auditor are more likely to just meet or beat analysts' forecasts and to report larger absolute discretionary accruals. However, the purchase of non-audit services is not associated with meeting other earnings benchmarks. We also find that the unexpected component of the non-audit to total fee ratio is negatively associated with stock returns on the filing date. These results are consistent with arguments that the provision of non-audit services strengthens an auditor's economic bond with the client and that investors price this effect. Keywords: Auditor independence; Auditor fees; Earnings management; Discretionary accruals. JEL Classification: G12, M41, M43, M49, L84.
Author: Benito Arrunada
Publisher: Springer Science & Business Media
ISBN: 1475767285
Category : Business & Economics
Languages : en
Pages : 203
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Book Description
This book focuses on market mechanisms which protect quality in the provision of audit services. The role of public regulation is thus situated in the context defmed by the presence of these safeguard mechanisms. The book aims to contribute to a better understanding of these market mechanisms, which helps in defining the con tent of rules and the function of regulatory bodies in facilitating and strengthening the protective operation of the market. An analysis at a more general level is provided in the three chapters making up Part 1. In the four chapters of Part 2, on the other hand, this analysis is applied to a particular problem to determine how those non-audit services often provided by auditors to their audit clients should be regulated. Finally, Chapter 8 contains a summary of the analysis and conclusions of the work. The conclusion with regard to non-audit services is that their provision generates beneficial effects in terms of costs, technical competence, professional judgment and competition and, moreover, need not prejudice auditor independence or the quality of these services. This as sessment leads, in the normative sphere, to recommending a legislative policy aimed at facilitating the development and use of safeguards provided by the free action of market forces. Regulation should thus aim to enable the parties-audit firms, self-regulatory bodies and audit clients-to discover through competitive market interaction both the most efficient mix of services and the corresponding quality safeguards, adjusting for the costs and benefits of each possibility.
Author: Yu (Elli) Zhang
Publisher:
ISBN:
Category :
Languages : en
Pages : 43
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Book Description
We examine the effect on auditor independence of auditors providing non-audit services in the Norwegian audit market. We report the results of three tests of independence of mind and one test of independence in appearance. These tests find that there is a positive relationship between audit fees and non-audit fees, which does not suggest loss of independence. Further analysis using two-stage least squares shows that audit and non-audit fees are jointly determined, and the results are still not consistent with loss of independence. There is no relationship between the provision of non-audit services and the frequency with which auditors issue modified audit opinions. There is no association between non-audit services and audit tenure. Finally, we examine the relationship between unexpected or excess non-audit fees and cost of capital. There is no relationship. Our findings fail to find any evidence for loss of independence of mind or loss of independence of appearance as a result of providing non-audit services.
Author: Richard M. Frankel
Publisher: Forgotten Books
ISBN: 9780666794659
Category : Business & Economics
Languages : en
Pages : 94
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Book Description
Excerpt from The Relation Between Auditors' Fees for Non-Audit Services and Earnings Quality This paper provides empirical evidence on the relation between non-audit services and earnings quality. We test hypotheses concerning: (1) the association between a firm's purchase of non-audit services from its auditor and earnings management, and (2) the stock price reaction to the disclosure of non-audit fees. In the past decade there has been a dramatic increase in the proportion of fee revenue auditors derive from non-audit services, yet we know little about how non-audit services are related to earnings quality.1 Concern about the effect of non-audit services on the financial reporting process was a primary motivation for the Securities and Exchange Commission (sec) to issue revised auditor independence rules on November 15, 2000. The rules require firms to disclose the amount of all audit and non-audit fees paid to its auditor. About the Publisher Forgotten Books publishes hundreds of thousands of rare and classic books. Find more at www.forgottenbooks.com This book is a reproduction of an important historical work. Forgotten Books uses state-of-the-art technology to digitally reconstruct the work, preserving the original format whilst repairing imperfections present in the aged copy. In rare cases, an imperfection in the original, such as a blemish or missing page, may be replicated in our edition. We do, however, repair the vast majority of imperfections successfully; any imperfections that remain are intentionally left to preserve the state of such historical works.
Author: Divesh Sharma
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
The implications of the provision of NAS to audit clients on audit independence have attracted considerable regulatory and research attention. This study contributes to this topical issue by investigating the association between NAS and audit independence using actual fee data and a more appropriate context that enable a proper ex post assesment of the correctness of the auditor's opinion decision. The results are consistent with the notion that auditors exhibit low propensity to issue a going-concern qualification to clients generating higher proportions of NAS fees to total fees and raise independence implications regarding the joint provision of audit and NAS.
Author: Allen T. Craswell
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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The provision of management advisory and other services by auditors to their audit clients has long been regarded, by regulators in Australia and overseas, as a threat to auditor independence. Evidence of the impact of non?audit services on auditors' independence has been derived using case studies and questionnaires and has focused on perceptions of independence. The aim of this paper is to investigate whether the provision of non?audit services impairs auditor independence by testing for an association between the provision of non?audit services and auditors' reporting opinions. Based on publicly available information for Australian listed companies for several years, the evidence suggests that auditors' decisions to qualify their opinions are not affected by the provision of non?audit services.
Author: Ismail A. Adelopo
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Current waves of corporate collapses have brought the discussions about auditor independence into spotlight. In this context, the debate about the propriety of auditors' joint provision of audit and non-audit services to their audit clients has featured considerably. One approach to this debate has been an economic modeling of interactions between audit and non-audit fees. While there are shades of opinions that the relationship can be captured using a single equation model, others are of the opinion that the relationships are better represented in a Simultaneous Equation Model (SEM). Also, there are concerns about the nature of data used in analyzing audit fees. Cross sectional data have been predominant; however, there are calls for more robust analyzes involving multi-period investigations and, precisely, the use of panel data approach. It has been argued that this affords more observations and enhances causal inferences. In this paper, using very recent data, we compared the result of a single equation model with a SEM of the relationship between audit and non-audit fee for listed companies in the UK and also highlighted the benefits of using panel data approach to the study of this relationships in the context of auditors' independence and improved audit and reporting quality. The issues addressed in this paper are very pertinent to better understanding of the role of the auditor in the corporate environment. The requirement for firms to disclose their audit and non-audit fees, the outright ban on the provision of certain non-audit services by the auditors to their audit clients, and the enhancements of the roles of the audit committees in determining the level of non-audit services that can be purchased from the incumbent and other auditors all underscore the seriousness of the issues relating to audit and non-audit services.
Author: United States Government Accountability Office
Publisher: Lulu.com
ISBN: 0359536395
Category : Reference
Languages : en
Pages : 234
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Book Description
Audits provide essential accountability and transparency over government programs. Given the current challenges facing governments and their programs, the oversight provided through auditing is more critical than ever. Government auditing provides the objective analysis and information needed to make the decisions necessary to help create a better future. The professional standards presented in this 2018 revision of Government Auditing Standards (known as the Yellow Book) provide a framework for performing high-quality audit work with competence, integrity, objectivity, and independence to provide accountability and to help improve government operations and services. These standards, commonly referred to as generally accepted government auditing standards (GAGAS), provide the foundation for government auditors to lead by example in the areas of independence, transparency, accountability, and quality through the audit process. This revision contains major changes from, and supersedes, the 2011 revision.
