Audit, Non-Audit and Information Technology Fees: Some Empirical Evidence
20 Pages Posted: 16 Apr 2001
Date Written: April 2001
This study examines the purchase of non-audit services by SEC audit clients. Effective February 5, 2001, the SEC has required the disclosure and description of audit, non-audit and information technology fees paid to the incumbent auditor. The SEC enacted this rule due to concerns over auditor independence. Our study reviews these disclosed fees contained in the proxy statements of 265 firms since the effective date of the new SEC disclosure rules. The results indicate that the actual incidence and magnitude of non-audit fees is much greater than the information relied upon during the SEC rulemaking deliberations. Consequently, our study calls into question the data used during SEC rule-making process, as well as the clarity of the current audit and non-audit service distinctions. Our results also suggest that the non-audit service landscape has changed dramatically since the last period of publicly available audit fee data (1978-1981). Finally, our results indicate a need for additional research regarding the provision of non-audit services.
Keywords: Audit fees; Non-audit fees; Disclosure
JEL Classification: M40, M49, G18
Suggested Citation: Suggested Citation