Auditor Independence in New Zealand: Further Evidence on the Role of Non-Audit Services

37 Pages Posted: 15 Feb 2013 Last revised: 16 Sep 2014

See all articles by Si Wen (Stacey) Wang

Si Wen (Stacey) Wang

University of Auckland

David Hay

University of Auckland - Business School

Date Written: February 14, 2013

Abstract

Non-audit services provided by auditors to their audit clients continue to be a controversial issue around the world. While research evidence has not usually shown that auditors lose their independence when providing non-audit services, the risk that they could do so is still a concern to regulators and financial report users. However, after changes to the environment of auditing, including new regulation, it may be that the situation has changed. This paper examines whether there is a relationship between non-audit services and the loss of independence for publicly listed New Zealand companies in 2011. The results using three tests – audit fees, audit opinion and auditor tenure – show that there is no impairment of independence with respect to audit fees and auditor tenure. However, there is some evidence of impaired auditor independence in relation to the audit opinion.

Keywords: auditing, non-audit fees, auditor independence, audit opinion, audit tenure

JEL Classification: G18, L84, M41

Suggested Citation

Wang, Si Wen (Stacey) and Hay, David, Auditor Independence in New Zealand: Further Evidence on the Role of Non-Audit Services (February 14, 2013). Available at SSRN: https://ssrn.com/abstract=2218072 or http://dx.doi.org/10.2139/ssrn.2218072

Si Wen (Stacey) Wang

University of Auckland ( email )

Auckland
New Zealand

David Hay (Contact Author)

University of Auckland - Business School ( email )

12 Grafton Rd
Auckland, 1010
New Zealand

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