The Impact of Independence-related AAERs on the Provision of Non-audit Services PDF Download
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Author: Kevin Hsu
Publisher:
ISBN:
Category :
Languages : en
Pages : 22
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Book Description
This study examines the differences in the provision of non-audit services (NAS) for audit offices that receive SEC Accounting and Auditing Enforcement Releases (AAERs). While prior research examines the links between the provision of non-audit services and impaired auditor independence, less attention has been paid to the contagion effects of independence violations. However, I do not find any evidence of a significant difference in the amount of NAS provided by offices that receive an independence-related AAER, relative to offices that receive other auditor-related AAERs. Broadly, my findings suggest that clients do not differentiate between independence violations and other audit-related violations and that no contagion effect exists for independence violations.
Author: Kevin Hsu
Publisher:
ISBN:
Category :
Languages : en
Pages : 22
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Book Description
This study examines the differences in the provision of non-audit services (NAS) for audit offices that receive SEC Accounting and Auditing Enforcement Releases (AAERs). While prior research examines the links between the provision of non-audit services and impaired auditor independence, less attention has been paid to the contagion effects of independence violations. However, I do not find any evidence of a significant difference in the amount of NAS provided by offices that receive an independence-related AAER, relative to offices that receive other auditor-related AAERs. Broadly, my findings suggest that clients do not differentiate between independence violations and other audit-related violations and that no contagion effect exists for independence violations.
Author: Saleh Juma Kh Alhajh
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
Author: Jagdish Singh Sidhu
Publisher:
ISBN:
Category : Auditing
Languages : en
Pages : 204
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Book Description
Author: Sun Min Kang
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
In 2014, the EU adopted a bill limiting the non-audit services of auditors, reflecting societal concern that non-audit services provided by auditors can compromise auditor independence. But different from the expectation that the provision of non-audit services by external auditors affects auditor independence, previous studies have shown inconsistent results. What could be the reason? Contracts for non-audit services start from the purchase motive of the company with a need for non-audit services (Firth, 1997; Parkash and Venable, 1993). Simunic (1984) argued that only abnormal companies with special problems purchase non-audit services. However, not all non-audit services sales compromise auditor independence. This study analyzed and illustrated whether the purchase of non-audit services affects auditor independence by the examining the interaction between the performance of audit clients with earnings management incentives and the quasi-rents of the auditor. The results show that the discretionary accruals of corporations with poor management performance increased with statistical significance when they purchased non-audit services from an external auditor. However, among companies with excellent management results, no statistical significance between the purchase of non-audit services and discretionary accruals was identified. Thus, to analyze the effects of non-audit services on auditor independence, researchers should consider the purchase motives of audit clients asking for non-audit services.
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: Allen T. Craswell
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
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: David Gwilliam
Publisher:
ISBN: 9781783631568
Category :
Languages : en
Pages :
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Book Description
Author: Denise Dickins
Publisher:
ISBN:
Category : Accounting
Languages : en
Pages : 158
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Book Description
Author: Michael Firth
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
There has been a strong growth in accounting firms' provisions of non-audit services to their audit clients. To date, however, there have been few studies into the determinants of this joint provision of audit and non-audit services. One reason for the paucity of research is the lack of publicly available data with which to empirically examine relationships and test theories. However, recent legislation in the United Kingdom requires disclosure of non-audit fees paid to a company's auditor and this provides data with which to investigate the joint provision of consultancy and audit services. A model is developed that seeks to explain a company's decision to hire non-audit services from the auditor. The model argues that companies that face potentially high agency costs purchase relatively smaller amounts of non-audit services from their auditor. High agency cost companies require independent audits in order to reassure investors and creditors; the provision of joint services, which increases the economic bonding of the auditor to the client, may jeopardize independence or the appearance of independence. The model is tested using data observations from 500 companies and the results indicate that companies that have higher agency costs proxies are associated with smaller purchases of non-audit services from their auditors.
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.
