Does Selling Non-Audit Services Impair Auditor Independence? New Research Says, 'Yes'

Current Issues in Auditing, Forthcoming

12 Pages Posted: 20 May 2015

See all articles by Monika Causholli

Monika Causholli

University of Kentucky - Von Allmen School of Accountancy

Dennis J. Chambers

Kennesaw State University

Jeff L. Payne

University of Kentucky - Von Allmen School of Accountancy

Date Written: May 19, 2015

Abstract

A recently published academic study by Causholli, Chambers, and Payne (2014) brings new evidence to a long-standing debate about whether the provision of non-audit services (NAS) can impair auditor independence. Prior research on this question has largely found no evidence of lower financial reporting quality when auditors provide high levels of NAS. By considering the potential that future NAS, rather than current NAS levels, could impair auditor independence, Causholli et al. bring a fresh perspective on the question. They argue that it is the potential for new NAS revenue that would most likely cause auditors to have impaired independence. They find strong evidence that audit quality suffers when clients are willing to purchase future NAS from their auditor.

Keywords: Non-audit service fees, audit quality, audit independence, earnings management

JEL Classification: M41, M42

Suggested Citation

Causholli, Monika and Chambers, Dennis J. and Payne, Jeff L., Does Selling Non-Audit Services Impair Auditor Independence? New Research Says, 'Yes' (May 19, 2015). Current Issues in Auditing, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2608046

Monika Causholli

University of Kentucky - Von Allmen School of Accountancy ( email )

Lexington, KY 40506
United States

Dennis J. Chambers (Contact Author)

Kennesaw State University ( email )

560 Parliament Garden Way
MD #0402
Kennesaw, GA 30144
United States
470-578-6375 (Phone)
470-578-9018 (Fax)

Jeff L. Payne

University of Kentucky - Von Allmen School of Accountancy ( email )

Lexington, KY 40506
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
285
Abstract Views
997
rank
106,692
PlumX Metrics