Belief perseverance among accounting practitioners regarding the effect of non-audit services on auditor independence

Beaulieu, Philip; Reinstein, Alan

doi:10.1016/j.jaccpubpol.2010.06.005

Cited by 15 publications

(7 citation statements)

References 36 publications

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“…Meanwhile, auditors and clients are likely to have different incentives, resulting in differing perceptions of auditor independence and its effects. For example, auditors are less concerned than non-auditors about the independence problem caused by non-audit services (Beaulieu & Reinstein, 2010). These incentives and perceptions cause the behavior of auditors and clients, as well as the threats to independence, to differ among firms.…”

Section: A Framework For Assessing the Impact Of Auditor Independence On Audit Qualitymentioning

confidence: 99%

Auditor Independence and Audit Quality

Tepalagul

Ling

2014

Journal of Accounting, Auditing & Finance

254

192

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This paper reviews literatures related to auditor independence and audit quality. The review is structured based on the four main threats to auditor independence, namely client importance, nonaudit services, auditor tenure, and client's affiliation with CPA firms. For each of the threats, we discuss findings related to the incentives, perception, and behavior of the auditor and the client, the effects of each threat on actual and perceived quality of audit and financial reports. We conclude that inconclusive evidence together with recent changes in auditing profession provides opportunities for further studies on auditor independence and audit quality issues.2

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Section: A Framework For Assessing the Impact Of Auditor Independence On Audit Qualitymentioning

confidence: 99%

Auditor Independence and Audit Quality

Tepalagul

Ling

2014

Journal of Accounting, Auditing & Finance

254

192

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“…Concerns were raised over the growth of Big 4 consulting at the December 2013 American Institute of Certified Public Accountants (AICPA) Conference by the SEC Chief Accountant Paul Beswick who said, “Such expansion runs the risk of damaging the accountants’ reputation” (Rapoport, 2013). Further, research suggests that approximately 25 per cent of auditors from small- and medium-sized firms agree that non-audit services pose a quality risk; however, only 6 per cent of large-firm auditors shared this view (Beaulieu and Reinstein, 2010).…”

Section: Literature Review and Research Propositionmentioning

confidence: 99%

The impact of Big 4 consulting on audit reporting lag and restatements

Meckfessel

Sellers

2017

MAJ

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Purpose This paper responds to concerns raised by the Securities and Exchange Commission (SEC), Public Company Accounting Oversight Board (PCAOB) and scholars over the rapid growth of Big 4 consulting practices. This paper aims to explores the question: Does the regrowth of sizable consulting practices by the Big 4 influence audit reporting lag and restatement rates? Design/methodology/approach A population of the SEC-registered US audit clients of the Big 4 was used in this study. Longitudinal data on Big 4 audit clients from 2000 through 2009 were analyzed to determine the impact of consulting practice size on the clients’ audit reporting lag and restatement rate. Findings This paper finds that consulting practice size has a positive and statistically significant influence on audit reporting lag and restatement rate. The results are robust to alternative specifications of the sample and controlling for the level of non-audit services provided to audit clients. Practical implications The findings contribute to the discussion of the scope-of-services issue. They provide empirical support for Zeff’s (2003) and Wyatt’s (2004) intuition that the loss of Big 4 professional focus – not simply conflicts of interests – is a major factor affecting the audit quality. Originality/value The uniqueness of this paper is in how it counts restatements. Each year this paper counts that annual financial statements are restated as opposed to each disclosure of a restatement. This paper’s contribution is to examine the association between the regrowth of Big 4 accounting firm consulting practices with audit reporting lag and restatements.

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“…Thus, the research results obtained about the impact of each factor on the independence of auditing and audit quality are different, even contradictory. Many studies have found no evidence in relation to factors such as non-audit services (Beaulieu & Reinstein, 2010;DeFond, Raghunandan, & Subramanyam, 2002;Ghosh & Pawlewicz, 2009;Ratzinger-Sakel, 2013;Seetharaman, Sun, & Wang, 2011), cost of auditing (Chi, Huang, Liao, & Xie, 2009;Choi, Sohn, & Yuen, 2018;Dogui, Boiral, & Heras-Saizarbitoria, 2014;Li, 2009;Reynolds & Francis, 2001), the size of the auditing firm (Canning & Gwilliam, 1999), the audit tenure (Carcello & Nagy, 2004;Ruiz-Barbadillo, Gomez-Aguilar, & Carrera, 2009;Wen & Hay, 2013) that affect the auditor independence.…”

Section: Previous Studiesmentioning

confidence: 99%