Non-Audit Services and Auditor Independence: New Zealand Evidence

29 Pages Posted: 28 Oct 2003

See all articles by Vivian Li

Vivian Li

University of Auckland

David Hay

University of Auckland - Business School

W. Robert Knechel

University of Florida - Fisher School of Accounting

Multiple version iconThere are 2 versions of this paper

Date Written: September 2003

Abstract

This paper examines evidence in New Zealand about whether auditors providing more non-audit services are less independent. Three tests are used to address the issue. The first examines whether there is a relation between non-audit fees and audit fees, the second examines whether there is a relation between non-audit fees and audit report qualification or modification, and the third examines whether there is a relation between non-audit fees and stability of audit tenure. Data are obtained from publicly available information for the Top 200 companies in New Zealand and listed companies not in the Top 200.

There is a significant and positive relationship between non-audit fees and audit fees. The only significant relationship between non-audit fees and audit qualifications or modifications is positive, and occurs in only one of three years. There is no significant relationship between non-audit fees and the stability of audit tenure. These results suggest that there is a potential for the impairment of auditor independence in appearance when the auditors provide non-audit services but no evidence of any impact on independence of mind.

Keywords: auditing, auditor independence, non-audit services

JEL Classification: M49

Suggested Citation

Li, Vivian Ying and Hay, David and Knechel, W. Robert, Non-Audit Services and Auditor Independence: New Zealand Evidence (September 2003). Available at SSRN: https://ssrn.com/abstract=452260 or http://dx.doi.org/10.2139/ssrn.452260

Vivian Ying Li

University of Auckland ( email )

Private Bag 92019
Auckland
New Zealand

David Hay (Contact Author)

University of Auckland - Business School ( email )

12 Grafton Rd
Auckland, 1010
New Zealand

W. Robert Knechel

University of Florida - Fisher School of Accounting ( email )

Warrington College of Business
PO Box 117166
Gainesville, FL 32611-7166
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
1,380
Abstract Views
7,232
rank
15,200
PlumX Metrics