Audit Fees, Non‐Audit Fees and Auditor Going‐Concern Reporting Decisions in the United Kingdom

Basioudis, Ilias G.; Papakonstantinou, Evangelos; Geiger, Marshall A.

doi:10.1111/j.1467-6281.2008.00263.x

Cited by 140 publications

(104 citation statements)

References 48 publications

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“…Meanwhile, there is no similar regulation in the United Kingdom. Consequently, CEOs' and directors' reputation and litigation costs are expected to be significantly less in the United Kingdom, and thereby it is reasonable to expect a different response from U.K. directors toward CEOs' accounting practices (Basioudis, Papakonstantinou, & Geiger, 2008). In addition, there is a difference in the approach that they follow in applying the corporate governance code.…”

Section: Literature Reviewmentioning

confidence: 99%

Internal Corporate Governance and Classification Shifting Practices

Zalata

Roberts

2015

Journal of Accounting, Auditing & Finance

130

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The corporate governance literature shows that strong internal corporate governance improves the monitoring of managerial discretion over accounting choices. However, most of these studies investigated the role of internal governance in a setting highly regulated through accounting standards, such as the treatment of accruals. Thus, there is little evidence available on whether internal governance collaborates or substitutes for strict accounting regulations. This study therefore investigates whether boards and audit committees also protect shareholders' interests in areas that are less regulated through generally accepted accounting principles (GAAP). Non-recurring items are relatively lightly regulated under International Accounting Standard 1 (IAS 1) and there is increasing concern over the use of non-recurring items to mislead investors (i.e., classifying some recurring expenses as non-recurring). This study therefore investigates whether internal corporate governance constrains classification shifting. Using a sample of 713 U.K. firm-year observations, we find that high-quality internal governance, in terms of the overall quality of board and audit committees, mitigates classification shifting, suggesting therefore that strong internal governance tends to act as a substitute for strict accounting standards. In particular, it appears that long tenure and independence help to mitigate classification shifting, and more CEO directors and share ownership instead may lead to lower quality monitoring.

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Section: Literature Reviewmentioning

confidence: 99%

Internal Corporate Governance and Classification Shifting Practices

Zalata

Roberts

2015

Journal of Accounting, Auditing & Finance

130

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“…Table 5 shows the results for the models with the dependent variable being the presence of a qualified opinion (models 1 to 3) and the auditor's opinion on the firm's continuity (models 4 to 6). This type of approach has been adopted in studies conducted in countries with capital markets considered to be more developed (BASIOUDIS; PAPAKONSTANTINOU; GEIGER, 2008;DEFOND;SUBRAMANYAM, 2002;SHARMA;SIDHU, 2001). To date, it is known that there is insufficient evidence from empirical studies conducted in Brazil.…”

Section: Descriptive Statisticsmentioning

confidence: 99%

“…The work of Basioudis, Papakonstantinou and Geiger (2008) uses a sample of 58 financially "stressed" companies, of which 29 received a report with a changed opinion regarding the firm's continuity and the rest (control sample) did not. The results, referring to the UK during the 2003 period, suggest that companies that pay more for NASs are less likely to receive a report with a changed opinion regarding going-concern issues.…”

Section: Non Audit Fees and Other Threats To Independencementioning

confidence: 99%

Non-Audit Services and Auditor Independence in an Environment of Low Investor Protection

Sobrinho

Bortolon

2016

RUC

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This paper aims to evaluate whether the provision of non-audit services (NASs) affects external auditor independence in an environment characterised by low legal protection of minority investors and a high concentration of ownership and control. Audit reports and costs of services are analysed over 3 years for 154 Brazilian companies. The binary variable proxy for independence indicates a qualified auditor's report and, as an alternative specification, the issuing of a going concern opinion. Logit models were employed with control variables to identify aspects related to other sources of threats to independence, management influence, and the effort and risk of auditing services. The results indicate that the provision of NASs does not affect auditor independence. This evidence is robust in terms of the alternative specification of the independence proxy and the observation of a subset of companies considered qualifiable. Only when summed to audit fees is there evidence of a negative impact on independence, signalling that the client's economic dependence might be more relevant than NAS with respect NON-AUDIT SERVICES AND AUDITOR INDEPENDENCE IN AN ENVIRONMENT OF LOW INVESTOR PROTECTIONRevista Universo Contábil, ISSN 1809-3337, FURB, Blumenau, v. 12, n. 4, p. 107-128, out./dez., 2016 to auditor independence. This result is robust to both independence proxies and the subset of qualifiable companies. In general, other sources of threats do not seem related to independence. This study provides evidence of a market in which auditor independence is expected to be compromised, given controlling shareholders' influence on company management. Keywords: Audit fees; Non-audit services; Auditor independence; Corporate governance. RESUMOEste trabalhou avaliou se a prestação dos serviços extra-auditoria afeta a independência dos auditores externos em um ambiente caracterizado pela baixa proteção legal aos investidores minoritários e com alta concentração de propriedade e controle. Foram analisados os relatórios de auditoria e os valores dos serviços extra-auditoria de 154 empresas brasileiras com ações negociadas em bolsa, durante 3 anos. A proxy de independência evidencia a modificação da opinião do auditor e alternativamente a emissão de ressalva a continuidade da firma. A relação entre os serviços extra-auditoria e a independência do auditor é analisada através de modelos logit. Os resultados indicam que a prestação de serviços extra-auditoria não afeta a independência do auditor. Esta evidência é robusta inclusive em análise da ressalva de continuidade da firma e no subconjunto de empresas consideradas ressalváveis. Apenas quando adicionados os honorários de auditoria, há a evidência de um impacto negativo sobre a independência, sinalizando que a dependência econômica do cliente pode ser mais relevante do que os serviços extra-auditoria em respeito à independência do auditor. Este resultado é robusto para ambas as proxies de independência e inclusive no subconjunto de empresas ressalváveis. Em geral, outras fonte...

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“…Cobbin (2002) revises the literature regarding fees, by analyzing their historical, cultural, institutional and insurance market-related extents. Last but not least, Basioudis et al (2008) consider that the relationship between the audit fees and the ones related to other consulting services have a significant impact on the auditor's independence. Based on this study, the empirical evidence proves that the audit fees influence the auditor's opinion regarding the testing of the going-concern assumption.…”

Section: Work Hypotheses Formulationmentioning

confidence: 99%

A Circular Causality Analysis on the Determinants of the Audit Fees within the NYSE-Quoted Companies

Chersan¹,

Robu²,

Carp³

et al. 2012

CIBIMA

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According to the International Standards on Auditing, audit fees are the amount that remunerates the financial auditor's activity, the certification of financial statements. The Profession Code states that these fees should be calculated in an objective way and the auditor's independence shouldn't be influenced by them. This study aims to identify the determinants of the audit fees, by testing the existence of a circular causality in the connection between audit fees and the financial performance of a NYSE-quoted company. The analysis is based on a sample of the first 100 companies (NYSE quoted) of the Top 500 Fortune, except for the companies in the investment funds and insurances field. In the study there were tested and validated the following working hypothesis: "the level of the audit fees is mainly influenced by the company's capacity to continue its activity", "the prestige of the audited company contributes to the decrease of the audit fees" and "the reduced fees level, paid by the customer audited by one of the Big4 companies in this exercise, contributes to the future prestige increase". For data analysis there were used linear regression analysis (simple and multiple) and the variance analysis (ANOVA). Research results indicate the existence of a circular causality, bidirectional, on the level of the relationship between audit fees and financial performance. For data processing, in the study there were used statistical software SPSS 19.0 and AMOS 16.0.

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Audit Fees, Non‐Audit Fees and Auditor Going‐Concern Reporting Decisions in the United Kingdom

Cited by 140 publications

References 48 publications

Internal Corporate Governance and Classification Shifting Practices

Internal Corporate Governance and Classification Shifting Practices

Non-Audit Services and Auditor Independence in an Environment of Low Investor Protection

A Circular Causality Analysis on the Determinants of the Audit Fees within the NYSE-Quoted Companies

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