Auditors in Fokus!

Ruud, T. Flemming

doi:10.1080/09638189200000035

European Accounting Review

1992

DOI: 10.1080/09638189200000035

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Auditors in Fokus!

T. Flemming Ruud

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1997

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The Provision of Nonaudit Services by Accounting Firms to their Audit Clients*

Firth

1997

Contemporary Accting Res

180

144

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Abstract. There has been a strong growth in accounting firms' provisions of nonaudit services to their audit clients. To date, however, there have been few studies into the determinants of this joint provision of audit and nonaudit services. One reason for the paucity of research is the lack of publicly available data with which to empirically examine relationships and test theories. However, recent legislation in the United Kingdom requires publication of nonaudit fees paid to a company's auditor, and this disclosure provides the data with which to investigate the joint provision of consultancy and audit services. A model is developed that seeks to explain a company's decision to hire nonaudit services from the auditor. The model argues that companies that face potentially high agency costs purchase relatively smaller amounts of nonaudit services from their auditor. High agency‐cost companies require independent audits in order to reassure investors and creditors; the provision of joint services, which increases the economic bonding of the auditor to the client, may jeopardize independence or the appearance of independence. The model is tested using data observations from 500 companies, and the results indicate that companies that have higher agency‐cost proxies are associated with smaller purchases of nonaudit services from their auditors.

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The Provision of Nonaudit Services by Accounting Firms to their Audit Clients*

Firth

1997

Contemporary Accting Res

180

144

View full text Add to dashboard Cite

show abstract

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Auditors in Fokus!

Cited by 1 publication

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The Provision of Nonaudit Services by Accounting Firms to their Audit Clients*

The Provision of Nonaudit Services by Accounting Firms to their Audit Clients*

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