Non‐audit Services and Auditor Independence Depending on Client Performance

Kang, Sun Min; Hwang, In Tae; Hur, Kang Sung

doi:10.1111/auar.12243

Cited by 11 publications

(10 citation statements)

References 44 publications

(158 reference statements)

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“…Kang et al. () examine audit quality from the viewpoint of audit independence. They find that as non‐audit fees increase, auditor independence is reduced only for low‐performing audit clients.…”

Section: Audit Qualitymentioning

confidence: 99%

Audit Quality, Climate Risk Disclosures and Ethical Guidance (eCode)

2019

Australian Accounting Review

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Section: Audit Qualitymentioning

confidence: 99%

Audit Quality, Climate Risk Disclosures and Ethical Guidance (eCode)

2019

Australian Accounting Review

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“…Studies in the US, Germany, Spain, New Zealand, Bangladesh, etc., do not support the argument that NAS to audit clients impairs auditor's independence (Alexander & Hay, 2013;Bloomfield & Shackman, 2008;Dunmore & Shao, 2006;Garcia-Blandon et al, 2017;Habib & Islam, 2007;Kohler & Ratzinger-Sakel, 2012;Quick et al, 2013;Walker & Hay, 2013). Unconditional restriction on joint provision ergo does not seem necessary (Kang et al, 2019).…”

Section: Provision Of Nas To Audit Clients: the Two Schools Of Thoughtsmentioning

confidence: 78%

Joint Provision of Non-audit Services to Audit Clients: Empirical Evidences from India

Tiwari

Debnath

2021

Vikalpa

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Executive Summary The provision of non-audit services (NAS) by an incumbent auditor has remained a highly contentious issue. One school argues that the joint provision does not impair an auditor’s independence. Instead, it reduces total costs, enhances the ability to detect material misstatements, increases technical competence due to knowledge spillovers and leads to intense competition. However, a substantial tranche of an audit firms’ income is derived from NAS, and the joint provision increases economic ties with the client. Therefore, another school of thought perceives that the joint provision impairs auditor independence. It is also alleged that auditors expect non-audit work after finishing the auditing job. Their independence is also affected by the risks of self-review. Extant literature reveals that the majority of the studies on the issue are archival and experimental. The studies are concentrated in the US, UK, Australia, Malaysia, Nigeria, South Africa, China, and some of the European Union Nations. The article examines the perspective of chartered accountants (CAs) on the joint provision of NAS in India. The study samples 119 CAs. The reliability of the survey result was measured using Cronbach’s α, and a score of 0.77 indicated acceptable internal consistency reliability. The data were analysed using Wilcoxon signed-rank test and the Mann Whitney U test statistic. The summary of their suggestions for ensuring auditor independence is presented separately. The findings reflect that existing prohibitions imposed by the Companies Act, 2013, are not enough to ensure auditor independence, and the Management Services u/s 144 of the Act needs to be clearly defined. Practitioners do not support the proposition that joint provision should end and a separate category of professionals be mandated to render NAS. However, the recommendations include strengthening provisions to reduce the conflict of interest.

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“…This finding is inconsistent with finding of other studies results (John And Tasie, 2012;Barizah et. al., 2005;Kang et. al., 2018;Salehi, 2009) providing non-audit service by external auditors to the same clients strongly negatively affect to audit independence.…”

Section: The Regression Results (Inferential Statistics)mentioning

confidence: 99%

Factors Influencing External Auditors’ Independence of Private Audit Firms in Ethiopia

2021

RJFA

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This study was examined factors affecting auditors' independence with reference to private audit firms in Ethiopia. The researcher employed quantitative research approach with explanatory research design where the effect caused by the independent variable on the dependent variable is observed through regression analysis. Primary data was collected through structured questionnaire from chive executive officers of private audit firm. Accordingly, the result of regression analysis showed that size of audit firm, size of audit fee, professional audit standard, competition, existence of audit committee and information technology have positive and statistically significant effect on auditors' independence. Whereas, provision was not statistically significant. Based on the findings of the study, the researcher recommended that for audit firms in Ethiopia have to work on statistically significant variables due to fact that they have positive influence in improving auditors' independence.

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Non‐audit Services and Auditor Independence Depending on Client Performance

Cited by 11 publications

References 44 publications

Audit Quality, Climate Risk Disclosures and Ethical Guidance (eCode)

Audit Quality, Climate Risk Disclosures and Ethical Guidance (eCode)

Joint Provision of Non-audit Services to Audit Clients: Empirical Evidences from India

Factors Influencing External Auditors’ Independence of Private Audit Firms in Ethiopia

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