Association between audit opinion and provision of non‐audit services
International Journal of Accounting & Information Management
ISSN: 1834-7649
Article publication date: 7 June 2011
Abstract
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.
Keywords
Citation
Ahadiat, N. (2011), "Association between audit opinion and provision of non‐audit services", International Journal of Accounting & Information Management, Vol. 19 No. 2, pp. 182-193. https://doi.org/10.1108/18347641111136463
Publisher
:Emerald Group Publishing Limited
Copyright © 2011, Emerald Group Publishing Limited