Do Auditor‐Provided Nonaudit Services Improve Audit Effectiveness? *

Do Auditor‐Provided Nonaudit Services Improve Audit Effectiveness? * Contemporary Accounting Research Vol. 24 No. 2 (Summer 2007) pp. 467–87 © CAAA Contemporary Accounting Research effects of auditor-provided nonaudit services and more specifically on the transfer of knowledge from the performance of the nonaudit task to audit tasks. This study contributes to the literature in several ways. First, although there are many studies that examine the provision of nonaudit services by the auditor (e.g., DeAngelo 1981; Wines 1994; Firth 1997; Ashbaugh, LaFond, and Mayhew 2003; Frankel, Johnson, and Nelson 2002; Gaynor 2002; Kinney, Palmrose, and Scholz 2004), these studies have all focused on whether auditors’ independence is compromised by the economic bond created from the provision of nonaudit services. This study extends the literature by examining whether there are positive effects or benefits arising from the provision of nonaudit services, and specifically whether performing nonaudit tasks facilitates exposure to relevant information that can improve audit quality via knowledge transfer. Second, this study extends the literature on how personal involvement in nonaudit tasks affects auditors’ objectivity. Prior studies analyzing auditor objectivity and independence have focused on how participation in the nonaudit task of designing an information system influences audit objectivity (Plumlee 1985; Johnson and Kaplan 1990). Together, these http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Contemporary Accounting Research Wiley

Do Auditor‐Provided Nonaudit Services Improve Audit Effectiveness? *

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Publisher
Wiley
Copyright
2007 Canadian Academic Accounting Association
ISSN
0823-9150
eISSN
1911-3846
D.O.I.
10.1506/Y6H1-7895-774T-5TM1
Publisher site
See Article on Publisher Site

Abstract

Contemporary Accounting Research Vol. 24 No. 2 (Summer 2007) pp. 467–87 © CAAA Contemporary Accounting Research effects of auditor-provided nonaudit services and more specifically on the transfer of knowledge from the performance of the nonaudit task to audit tasks. This study contributes to the literature in several ways. First, although there are many studies that examine the provision of nonaudit services by the auditor (e.g., DeAngelo 1981; Wines 1994; Firth 1997; Ashbaugh, LaFond, and Mayhew 2003; Frankel, Johnson, and Nelson 2002; Gaynor 2002; Kinney, Palmrose, and Scholz 2004), these studies have all focused on whether auditors’ independence is compromised by the economic bond created from the provision of nonaudit services. This study extends the literature by examining whether there are positive effects or benefits arising from the provision of nonaudit services, and specifically whether performing nonaudit tasks facilitates exposure to relevant information that can improve audit quality via knowledge transfer. Second, this study extends the literature on how personal involvement in nonaudit tasks affects auditors’ objectivity. Prior studies analyzing auditor objectivity and independence have focused on how participation in the nonaudit task of designing an information system influences audit objectivity (Plumlee 1985; Johnson and Kaplan 1990). Together, these

Journal

Contemporary Accounting ResearchWiley

Published: Jun 1, 2007

References

  • The provision of nonaudit services by accounting firms to their clients
    Firth, Firth
  • Why press coverage of a client influences the audit opinion
    Joe, Joe
  • The effects of precedents and client position on auditors' financial accounting policy judgment
    Salterio, Salterio
  • The persuasiveness of audit evidence: The case of accounting policy decisions
    Salterio, Salterio; Koonce, Koonce
  • The importance of account relations when responding to interim audit testing results
    Vandervelde, Vandervelde
  • Auditor independence, audit qualifications and the provision of non‐audit services: A note
    Wines, Wines

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