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Author Chai, Sylvia

Title Audit and non-audit service provision : earnings management and audit opinion implications / Sylvia Chai, Christine A. Jubb
Published Parkville, Vic. : University of Melbourne. Dept. of Accounting, 2000


Location Call no. Vol. Availability
 MELB  657.45 Cha/Aan  AVAILABLE
Description 45 pages ; 30 cm
Series Research paper ; 01-01
Research paper series (University of Melbourne. Department of Accounting) ; 01-01
Summary This study investigates whether auditors compromise their independence when they provide audit and non-audit services jointly to their clients. The relationship between the level of non-audit services fees and two independence-related measures: (i) the level of earnings management and (ii) the type of audit opinion issued, is examined. The results indicate that for Big 6 audited companies purchasing higher levels of non-audit services engage in higher levels of earnings management compared to companies purchasing a lower level of non-audit services from their incumbent auditor. However, the study finds that high level purchasers of non-audit services are not more likely to receive a clean opinion compared to low level purchasers of non-audit services. In order to explain the conflicting results, further tests are conducted to determine whether companies that purchase concurrently a high level of non-audit services and indulge in high levels of earnings management are more likely to receive a clean audit opinion. This is important since auditors will only be perceived as compromising their independence if they fail to issue qualifications when the level of earnings management is high. The findings indicate that no relationship exists between the type of audit opinion issued and the interaction between the level of non-audit service fees and the level of earnings management. Hence, it is concluded that auditors do not impair their independence in terms of willingness to issue deserved qualifications when providing joint services.00000 g
Notes "December 2000"
Bibliography Bibliography: pages 40-43
Subject Auditors -- Professional ethics.
Auditors' reports.
Auditor-client relationships.
Financial statements.
Auditors -- Professional ethics -- Australia.
Auditor-client relationships -- Australia.
Author Jubb, Christine.
University of Melbourne. Department of Accounting