Impact of IFRS Transition Complexity on Audit and Non-Audit Fees: Evidence from Small and Medium-Sized Listed Companies in Finland

41 Pages Posted: 1 Sep 2008 Last revised: 20 May 2009

See all articles by Hannu J. Schadewitz

Hannu J. Schadewitz

Turku School of Economics at the University of Turku - Department of Accounting & Finance

Markku J. Vieru

University of Lapland - Faculty of Social Sciences, Multidimensional Tourism Institute

Date Written: June 12, 2008

Abstract

This study focuses on whether IFRS (International Financial Reporting Standards) adjustments to consolidated financial statements and fees paid to statutory auditors are related in the samples of Finnish first-time IFRS users. The Finnish data are employed since prior research findings suggest that there are large differences between Finnish accounting standards (FAS) and IFRS. Therefore, it is highly likely that extensive demand for audit and non-audit services during the transition from FAS to IFRS would be requested. When taking into account several control variables in line with prior research, our analyses based on unique, hand-collected data indicate that fees paid to auditors are slight related to the degree of IFRS adjustments. The finding is consistent with our hypothesis. Also, the study provides evidence that a company with a high disparity between FAS and IFRS in its financial accounts needs more costly non-audit services during the transition phase than one with low disparity. However, the results suggest that audit fees are not significantly related to the magnitude of IFRS adjustments.

Keywords: IFRS, non-audit fees, audit fees, transition

JEL Classification: g39

Suggested Citation

Schadewitz, Hannu J. and Vieru, Markku, Impact of IFRS Transition Complexity on Audit and Non-Audit Fees: Evidence from Small and Medium-Sized Listed Companies in Finland (June 12, 2008). Available at SSRN: https://ssrn.com/abstract=967314 or http://dx.doi.org/10.2139/ssrn.967314

Hannu J. Schadewitz (Contact Author)

Turku School of Economics at the University of Turku - Department of Accounting & Finance ( email )

Rehtorinpellonkatu 3
FIN-20500 Turku
Finland
+358 2 333 9321 (Phone)
+358 2 333 9350 (Fax)

HOME PAGE: http://www.utu.fi/en/people/hannu-schadewitz

Markku Vieru

University of Lapland - Faculty of Social Sciences, Multidimensional Tourism Institute ( email )

P.O. Box 122
Rovaniemi FIN-96101
Finland
+358 400 377641 (Phone)
+358 16 341 2600 (Fax)

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