Download or read book The Impact of Non Audit Services on Capital Markets written by Seunghan Nam and published by . This book was released on 2007 with total page 64 pages. Available in PDF, EPUB and Kindle. Book excerpt: The framers of the Sarbanes-Oxley Act (SOA) presume that non-audit services lower the quality of financial statements, so they have prohibited auditors from offering most non-audit services. In addition, regulators believe that non-audit services (NAS) may cause the auditor to be perceived as dependent in appearance, thus increasing information risk, even if they have no impact on the quality of financial statements.I investigate two hypotheses using pre-SOA data. First, I ask whether the proportion of non-audit services fees to total fees has a positive or negative association with the ability of financial statements to predict a firm's future cash flows, which can be considered a measure of the quality of the statements. Second, I ask whether the proportion has a negative or positive association with the cost of capital and the bid/ask spread, controlling for the predictive ability. The cost of capital and the bid/ask spread serve as proxies of information risk. Contrary to the proponents of prohibiting NAS, I find that the proportion of non-audit services fees to total fees has a positive association with the predictive ability. If we control for the quality of financial statements, non-audit services still have a negative association with the cost of capital and the bid/ask spread as proxies for information risk. These findings suggest that there are benefits from non-audit services, both to the quality of financial statements and to reducing information risk.
Download or read book The Impact of Non audit Services on Capital Markets written by Seungham Nam and published by . This book was released on 2005 with total page 160 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book The Effects of Two Auditors and Non audit Services on Audit Fees written by and published by . This book was released on 2005 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book America s Capital Markets written by United States. Congress. House. Committee on Financial Services. Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises and published by . This book was released on 2006 with total page 292 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Do Nonaudit Services Enhance Value Evidence from the Capital Markets written by Seong-Yeon Cho and published by . This book was released on 2007 with total page 31 pages. Available in PDF, EPUB and Kindle. Book excerpt: Nonaudit services performed by auditors for their audit clients have long been a focus of concern for regulators. The SEC has mandated disclosure of fees for both audit and nonaudit services in order to provide investors with a more transparent representation of the auditor-client relationship. The purpose of this study is to investigate whether nonaudit service fees influence the value relevance of accounting numbers. We find that nonaudit fees have a positive effect on the value relevance of accounting numbers. This result suggests that the provision of auditor's nonaudit services increases the value relevance of accounting information. This result is contrary to the prevailing belief that nonaudit services impair auditor independence. We also find that investors' perception of nonaudit fees has changed. In particular, investors perceive nonaudit service as more value enhancing even after the enactment of Sarbanes-Oxley.
Download or read book Non Audit Services and Auditor Independence written by Sun Min Kang and published by . This book was released on 2015 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: In 2014, the EU adopted a bill limiting the non-audit services of auditors, reflecting societal concern that non-audit services provided by auditors can compromise auditor independence. But different from the expectation that the provision of non-audit services by external auditors affects auditor independence, previous studies have shown inconsistent results. What could be the reason? Contracts for non-audit services start from the purchase motive of the company with a need for non-audit services (Firth, 1997; Parkash and Venable, 1993). Simunic (1984) argued that only abnormal companies with special problems purchase non-audit services. However, not all non-audit services sales compromise auditor independence. This study analyzed and illustrated whether the purchase of non-audit services affects auditor independence by the examining the interaction between the performance of audit clients with earnings management incentives and the quasi-rents of the auditor. The results show that the discretionary accruals of corporations with poor management performance increased with statistical significance when they purchased non-audit services from an external auditor. However, among companies with excellent management results, no statistical significance between the purchase of non-audit services and discretionary accruals was identified. Thus, to analyze the effects of non-audit services on auditor independence, researchers should consider the purchase motives of audit clients asking for non-audit services.
Download or read book The Economics of Audit Quality written by Benito Arrunada and published by Springer Science & Business Media. This book was released on 2013-11-11 with total page 203 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book focuses on market mechanisms which protect quality in the provision of audit services. The role of public regulation is thus situated in the context defmed by the presence of these safeguard mechanisms. The book aims to contribute to a better understanding of these market mechanisms, which helps in defining the con tent of rules and the function of regulatory bodies in facilitating and strengthening the protective operation of the market. An analysis at a more general level is provided in the three chapters making up Part 1. In the four chapters of Part 2, on the other hand, this analysis is applied to a particular problem to determine how those non-audit services often provided by auditors to their audit clients should be regulated. Finally, Chapter 8 contains a summary of the analysis and conclusions of the work. The conclusion with regard to non-audit services is that their provision generates beneficial effects in terms of costs, technical competence, professional judgment and competition and, moreover, need not prejudice auditor independence or the quality of these services. This as sessment leads, in the normative sphere, to recommending a legislative policy aimed at facilitating the development and use of safeguards provided by the free action of market forces. Regulation should thus aim to enable the parties-audit firms, self-regulatory bodies and audit clients-to discover through competitive market interaction both the most efficient mix of services and the corresponding quality safeguards, adjusting for the costs and benefits of each possibility.
Download or read book Non Audit Services and Auditor Independence written by Zulkarnain Muhamad Sori and published by . This book was released on 2005 with total page 31 pages. Available in PDF, EPUB and Kindle. Book excerpt: Regulators and stakeholders in worldwide capital markets have placed a great concern on the potential threat of joint provision of audit and non-audit services to audit client on perceived auditor independence. This study reports the research findings of the effects of the joint provision of audit and non-audit services (NAS) on perceived auditor independence from the perspective of Malaysian auditors, loan officers and senior managers of public listed companies. The main findings of the study were that auditor independence would significantly threaten when audit and NAS were jointly provided by audit engagement team, however, this perceptions were changed when exist proper segregation of duties or 'Chinese Wall' in audit firms either by way of staff from separate department or entities.
Download or read book Restricting Non Audit Services in Europe The Potential Lack Of Impact of a Blacklist and a Fee Cap On Auditor Independence and Audit Quality written by Nicole V.S. Ratzinger-Sakel and published by . This book was released on 2015 with total page 37 pages. Available in PDF, EPUB and Kindle. Book excerpt: The European audit reform aims to stabilize financial markets by enhancing trust in the statutory audit. To strengthen auditor independence and to increase audit quality the provision of non-audit services to audit clients is further restricted. The supranational introduction of a blacklist, including prohibited non-audit services, and of a cap on the volume of non-audit fees is a novelty on the European level. The purpose of this paper is threefold. First, we analyze these measures in light of both current national restrictions of non-audit services and auditor fee disclosure requirements in France, Germany and the United Kingdom. Second, we assess the potential impact of the cap on the volume of non-audit services by providing descriptive evidence on current fee levels in these three countries. Third, we critically assess the impact of the audit reform regarding non-audit services in light of audit research by analyzing the state-of-the-art. On this basis, we doubt whether the European reform of auditor-provided non-audit services is effective and efficient. The main goal of enhancing perceived auditor independence and, thus, public trust in audited financial statements of public-interest entities may be hardly achieved and the blacklist might present a tradeoff between auditor independence and audit quality.
Download or read book The Enron Collapse written by United States. Congress. House. Committee on Financial Services. Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises and published by . This book was released on 2001 with total page 176 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Disruption in the Audit Market written by Krish Bhaskar and published by Routledge. This book was released on 2019-04-16 with total page 117 pages. Available in PDF, EPUB and Kindle. Book excerpt: Focussing on the dominance of the Big Four auditing firms – PwC, EY, Deloitte and KPMG – this concise volume provides an authoritative critical assessment of the state and future of the audit market, currently the subject of much debate and the focus of significant government enquiries. Drawing on extensive research and a vast collection of evidence from interviews with insiders, experts and users, it explores the key issues of audit quality, independence, choice and the growing expectation gap. Just as disruptive technologies are overturning other established sectors, this book explores their impact on accounting, financial reporting and auditing. It questions whether the Big Four-dominated audit market is prepared not only for the inevitable disruption of new technologies, but also the challenges of negative public perceptions, cynicism about regulation and demands for greater transparency. In the context of increasing high-profile corporate failures, this book provides a compelling scrutiny of the industry’s failings and present difficulties, and the impact of future disruption. At this crucial time, it will be of great interest to students, researchers and professionals in accounting and auditing, as well as policy makers and regulators.
Download or read book Accounting Reform and Investor Protection without special title written by United States. Congress. Senate. Committee on Banking, Housing, and Urban Affairs and published by . This book was released on 2003 with total page 696 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Public Accounting Firms written by United States. General Accounting Office and published by . This book was released on 2003 with total page 152 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book EC Proposal of Audit Only Firms written by Patrick Velte and published by . This book was released on 2016 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This article discusses the interdiction of combining audit and not audit services by the external auditor, which the EU Commission (EC) is presently discussing as reform measures in its regulation draft of November 30, 2011. According to an agency-theoretical definition of the auditor's function within corporate governance, results of the empirical audit research on the effects of an auditor's combined audit and non audit services on accounting and audit quality are laid out in a state-of-the-art analysis to give a policy advice. We analyze, whether the interdiction of combining audit and non audit services has a negative impact on the quality of financial accounting and audit as EC assumes. For this purpose a selection of variables for approximate rating of the quality of financial accounting (earnings management, restatements, market reactions) and the quality of external audit (going concern opinions) will be used. So far, research suggests an inconsistent image mainly in the U.S. capital market. Therefore a negative impact of an auditor's offering audit and non audit services on the quality of accounting and audit can mainly only be concluded by few variables (earnings management, market reactions). Those studies, which use restatements and going concern opinions as a proxy for accounting and audit quality, come to inconsistent results. Consequently, the benefit of the reform presently discussed by the EC is arguable. Moreover, so far there are only a few empirical studies for the EU member states analyzing the impact of combined audit and non audit services, thus providing evidence for the necessity of this course of action.
Download or read book The Sarbanes Oxley Act written by Wilma H. Fletcher and published by Nova Publishers. This book was released on 2008 with total page 176 pages. Available in PDF, EPUB and Kindle. Book excerpt: The Sarbanes-Oxley Act of 2002, PL 107-204 described by some as the most important and far-reaching securities legislation since passage of the Securities Act of 1933, 15 USC §§ 77a et seq, and the Securities Exchange Act of 1934, 15 USC §§ 78a et seq, both of which were passed in the wake of the Stock Market Crash of 1929. The Act establishes a new Public Company Accounting Oversight Board which is to be supervised by the Securities and Exchange Commission. The Act restricts accounting firms from performing a number of other services for the companies which they audit. The Act also requires new disclosures for public companies and the officers and directors of those companies. Among the other issues affected by the new legislation are securities fraud, criminal and civil penalties for violating the securities laws and other laws, blackouts for insider trades of pension fund shares, and protections for corporate whistleblowers. This book contains important analyses on the impact of this Act.
Download or read book Audits of Public Companies written by United States. General Accounting Office and published by Nova Publishers. This book was released on 2008 with total page 154 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book examines (1) concentration in the market for public company audits, (2) the potential for smaller accounting firms' growth to ease market concentration, and (3) proposals that have been offered by others for easing concentration and the barriers facing smaller firms in expanding their market shares.
Download or read book The Effect of Non audit Services on Audit Quality written by Osasumwen Frances Arigbe and published by . This book was released on 2012 with total page 49 pages. Available in PDF, EPUB and Kindle. Book excerpt: In recent times, there has been disturbing news of how stock market prices crash and investors run at losses. Investors usually fall prey to situations like this because they made poorly informed decisions. Most times, they rely on an organization's published financial statements with utmost trust yet they still lose. Auditors ought to spot material misstatements in the course of their audit exercises and give an opinion in their reports. The problem is, in their audit exercises, they are sometimes faced with situations that cause conflict of interests. This conflict of interests may lead them to going out of the scope of their duites to perform other services, which are called Non-Audit Services. The purpose of this study was to discover the effect of non-audit services on audit quality and how this affects the users of financial information. The primary focus is on audit firms. A survey instrument was applied in gathering data needed for this study and these data were analyzed using descriptive statistics and correlations on a software called Statistical Package for Social Sciences (SPSS) which aided in deriving information relevant to this study.
