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This study tests the association between time pressure, training activities and dysfunctional auditor behaviour in small audit firms. Based on survey responses from 235 certified auditors working in small audit firms in Sweden, the analysis shows that perceived time pressure is positively associated with dysfunctional auditor behaviour, while the level of participation in training activities such as workshops and seminars is negatively associated with dysfunctional auditor behaviour. These findings suggest that audit quality is at risk when auditors experience high levels of time pressure but also that auditors who frequently take part in training activities to a lesser extent engage in dysfunctional auditor behaviour.

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Purpose – The paper aims to investigate audit and non-audit fees during the global financial crisis (GFC) in an environment that is relatively sparsely regulated with regard to the provision of non-audit services. Design/methodology/approach – Audit and non-audit fees were studied during pre-GFC (2006-2007), GFC (2008-2009) and post-GFC (2010-2011) periods. Findings – During the GFC, Swedish companies benefited from an increase in sales and total assets, although return on assets decreased. In this setting, the auditors charged higher audit fees compared with the pre-GFC period, despite the absence of increased audit reporting lags. A significant increase in audit fees continued during the post-crisis periods with auditors paying more attention to companies’ leverage and whether they report losses. At the same time, the companies spent less on non-audit services. Research limitations/implications – This study is limited to companies from Sweden, which was less affected by the GFC. Practical implications – GFC auditors are able to charge higher audit fees to public companies including those that are well-performing during financial crises, and they are also able to increase the audit fees in the post-crisis period. This implies that auditors put in extra audit effort to compensate for higher risk, or that they are good at negotiating prices with their clients. However, non-audit fees decreased during the same period, implying that the demand for these services drops under financial instability. Originality/value – The study highlights auditors’ behavior in the liberal economic environment and it studies both audit fees and non-audit fees before GFC, during GFC and after the GFC. The GFC appears to have provided audit firms the opportunity to extract higher audit fees. Our findings are of interest to managers, auditors and regulators.

The purpose of this study is to examine the relationship between audit quality in private firms and the provision of non-audit services (NAS) -an issue that has rarely been considered in prior research. The threats to auditor independence are different in private firms compared to public firms. The same is true of the opportunities to use the same knowledge for audit and for NAS. Therefore, the effect of the provision of NAS on audit quality is also likely to be different. In this study, audit quality is measured by discretionary accruals, as well as by managers' perceptions of the extent to which the audit improves accounting quality. The regression analysis is based on 420 surveyed private firms in Sweden and suggests that audit quality is positively associated with NAS in general and accounting services in particular. The findings indicate that the joint provision of audit and NAS do not necessarily result in impaired auditor independence, but rather support the existence of knowledge spillover between the services.

This article was originally published in 2018 in Auditing: A Journal of Practice & Theory 37 (3): 91-115.

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The joint provision of audit and non-audit services by incumbent auditors has been intensively debated in the literature. The basic issue is that, while non-audit services can impair auditor independence, knowledge spillovers from these services can reduce the audit cost. This is an important trade-off for small and medium-sized enterprises (SMEs) that depend on their auditors for non-audit services. Using data from 322 Swedish SMEs, this study investigates the choice of purchasing non-audit services from the incumbent auditor and other audit firms. We hypothesize, and find, that the length of the auditor-client relationship is positively related to the purchase of non-audit services from incumbent auditors. Also, we find a positive association between perceived quality of audit services and the likelihood of a client purchasing non-audit services from the auditor. However, unlike studies of publicly traded companies, agency variables do not drive the purchase of non-audit services by SMEs.