会计学dissertation：非审计服务对审计的影响
11-09, 2015
会计学dissertation：非审计服务对审计的影响
本文回顾了非审计服务对审计独立性和审计质量的影响。本文首先做了简介和四个利益相关者观点的总体框架。框架将描述非审计服务代理对审计独立性和审计质量 的评估影响，例如审计师的订单、客户、财务报告用户,和监管机构。接下来,细节将在以下章节中讨论研究人员使用代理来评估非审计服务的影响的各种观点，如审计师对于倾向持续经营的参考意见和财务报表的问题。最后,本研究将描述当前的论题和进一步的研究建议。本文献对联合审计和非审计服务的规定以及有关规定影响感兴趣的学者应该是有所帮助的，比如2000年的美国证券交易委员会和2003年2002年的萨班斯-奥克斯利法案。
Abstract
The paper reviews literatures on influences of non-audit services on auditor independence and audit quality. It is begun with a brief introduction and a general framework from the standpoints of four stakeholders. The framework will describe the proxies used to evaluate the influences of non-audit services on auditor independence and audit quality, in the order of auditors, clients, financial reporting users, and regulatory bodies. Next, detail discussions will present in the following chapters about the various views of researchers who use the proxies to evaluate the impact of non-audit services, such as auditors’ propensity to issue going-concern opinions and restatements of financial statements. Finally, existing limitations in this research will be described and suggestions for further research will be offered. The literature review is supposed to be useful to academics interested in impact of joint provisions of audit and non-audit services as well as to the relevant regulations, such as U.S Securities of Exchange Commission in 2000 and 2003 and Sarbanes-Oxley Act of 2002.
Contents
Chapter 1 Introduction…………………………………………………………………. 引言
Chapter 2 Framework for Research in Non-Audit Services…………………………..非审计服务的研究框架
2.1 Relevant definitions…………………………………………………………………相关定义
2.2 Conflict views of auditing regulators and professions……………………………...审计监管机构和职业冲突的观点
2.3 Framework for literature review research………………………………………....文献综述研究的框架
2.3.1 Auditors (linkage 1)……………………………………………………………审计师#p#分页标题#e#
2.3.2 Clients (linkage 2)……………………………………………………………..客户
2.3.3 Financial reporting users (linkage 3)…………………………………………..财务报告使用者
2.3.4 Regulators (linkage 4)…………………………………………………………监管机构
2.4 Sources of prior literatures………………………………………………………...原始文献来源
Chapter 1 Introduction引言
The discussion on joint provision of audit and non-audit services and whether it can adversely affect auditor independent and audit quality has been a controversial topic among academics, professions, and regulators for many years. The objective of this literature review is to review and synthesise the academic literatures on impact of non-audit services on auditor independence and propose suggestions for future research. To start this study, it is important to explain the definitions and perceptions of non-audit services, auditor independence, and audit quality. Because of different stakeholders have different concerns towards the association between non-audit services and audit quality and what indicators are appropriate to assess this association between joint provision of audit and non-audit services (Knechel et al., 2013), the study is arranged following this logic order. As it is widely presumed in regulators that the economic bonding resulting from auditor-provided non-audit services would compromise auditor independence thus impair audit quality, especially after the collapse of Enron and WorldCom, auditing professions tend to hold the opposite view as they emphasise the importance of knowledge spill-over impact of joint provisions of audit and non-audit services. In academic research, the impact of non-audit services provided by incumbent auditors on auditor independence and audit quality is mixed and elusive. Therefore, academic researchers have been examining such impact in order to give guidance on auditing professions and regulations.
To reconcile different viewpoints, and to understand how non-audit services affect auditor independence and audit quality, a general framework is firstly adopted through which the overall links between specific proxies are illustrated to get a better understanding of this study. This research intends to investigate the various literatures using different proxies to evaluate auditor independence and audit quality from the perspectives of auditors, clients, financial reporting users, and regulators. These proxies are considered to be reliable to assess auditor independence and audit quality, such as non-audit fee ratios, auditors’ propensity to issue going-concern opinions, cost of capital of clients’ companies, discretionary accruals, and restatements of financial reporting. Therefore, according to survey, experiment or archival research, researchers have provided their findings about the relationship between non-audit services and auditor independence or audit quality, most of which are inconsistent and includes positive, negative and no association.#p#分页标题#e#
This study is supposed to contribute to existing research. First, a general framework is developed to connect viewpoints of stakeholders and relevant proxies to evaluate their opinions. These proxies link the stakeholders’ views to auditor independence and audit quality. Second, this literature review adds to existing academics on this topic, especially non-audit services are usually considered as a part of literature reviews on audit quality. Thus, this study provides a detailed research which specifies on non-audit services. Third, apart from literature reviews on existing academics, current regulations and the development of such regulations are also analysed in detail. Therefore, this study are tend to be useful to academic researchers, auditing professions, regulators, investors, and those who are interested in understanding the impact of non-audit services provided by incumbent auditors on auditor independence and audit quality.
The reminder of this literature-review-based research is organised in the following order: Chapter 2 will illustrate a general framework for non-audit services research, which will provide the basic clue for the following research. Then the next four chapters (from 3 to 6), will cover prior literatures from perspectives of auditors, clients, financial reporting, and regulatory bodies respectively. These chapters are closely related to the framework figure stated in Chapter 2. The next chapter is total conclusion of the papers, which encompass limitations of this literature review on non-audit services and propose suggestions about the directions for the further research.
Chapter 2 Framework for Research in Non-Audit Services非审计服务的研究框架
As the Supreme Court Chief Justice in charge of the case about United States versus Arthur Young Corporation, Warren Burger emphasises the extreme importance of independence to an auditor and describes the auditors act as a watchdog which is key to operation efficiency and public trust in capital markets in the following statement:
“…this ‘public watchdog’ function demands that the accountant maintain total independence from the client at all times and requires complete fidelity to the public trust.”
Considering the importance of auditor independence, it is worthy further examination about whether joint provisions of non-audit services will impair auditor independence thus subsequently affect audit quality. This part is arranged as follows: relevant definitions about ‘auditor independence’, ‘audit quality’, and ‘non-audit services’ will be discussed first. Then conflicts of views will be discussed briefly. In addition, an illustration of framework of total literature reviews will be provided and relevant proxies used will be introduced, followed by a brief introduction about the source of previous literatures.
2.1 Relevant definitions相关定义 #p#分页标题#e#
There are a numbers of definitions towards auditor independence and audit quality. However, auditor independence is not specified defined but normally related with concept of audit quality. Audit quality is generally defined as “the market assessed joint probability that a given auditor will both (a) discover a breach in the client’s accounting system, and (b) report the breach” (DeAngelo, 1981). This definition is often interpreted to break audit quality down into two components: (1) the likelihood that an auditor discovers existing material misstatements and (2) appropriate actions that have been taken on this breach.
In the context of the research focus, non-audit services are refined as auditor-provided non-audit services, which have the importance of necessary to seek its effects on auditor independence and audit quality. The scope of non-audit services defined in the Sarbanes-Oxley Act of 2002 (SOX) is as follows: bookkeeping or other services related to the accounting records or financial statements of the audit client; financial information systems design and implementation; appraisal or valuation services, fairness opinions, or contribution-in-kind reports; actuarial services; internal audit outsourcing services; management functions or human resources; broker or dealer, investment advisor, or investment banking services; legal services and expert services unrelated to the audit.
2.2 Conflicts views of auditing regulators and professions审计监管机构和职业冲突的观点
It is widely accepted in perspectives of regulators that strict rules and regulations should be in place to guarantee the independence status of auditors. Bazerman and Moore (2011) propose two extreme alternatives to help the auditing system maintain their independence: (A) in order to maintain auditors’ independence both in appearance and in fact, ban all non-audit services provided by the incumbent auditors to their clients, jobs taken with clients, or durable long-term partnerships with their clients; or (B) agree incumbent auditors to provide all non-audit services to the clients for the purpose of fulfilment clients’ needs, then attempt to establish a set of complicated legislative and professional motivations to overcoming the corrupting impacts derived by the desire of the auditors to meet their clients’ needs. It seems that auditing regulators regard option (B) has the potential guarantee to maintaining auditor independence. In practice, most non-audit services are banned by the Sarbanes-Oxley Act of 2002 (SOX).
However, audit professions are more likely to balance the costs and benefits of joint provisions of non-audit services and they prefer to accept the notion that auditor independence can avoid to be compromised if appropriate controls are in place. In addition, they argue that the appropriate explanation of non-audit services provided by incumbent auditors is their knowledge spill-over or synergies effects, i.e. experience gained from one function can promote performing for other tasks (Krishnan and Yu, 2011).#p#分页标题#e#
Therefore, a longstanding debate has continued among different stakeholders, such as auditing professions and regulators, on the impact of non-audit services provided by incumbent auditors. Academics have more concerned on this important issue and it is worthy an overall discussion about their views for better investigation of future research, which can also promote the developments of relevant regulations.
2.3 Framework for literature review research文献综述研究的框架
There is generally framework which provided a logic line for reviews of prior literatures, which is illustrated as follows:
In order to examine the effects of non-audit services provided by incumbent auditors on auditor independence and audit quality, various proxies are applied in both empirical and archival researches. From the different perspectives of stakeholders, different proxies are adopted relevant to their own incentives and perceptions, which will be discussed below. The perspectives of auditors, clients, and financial reporting users are input which will influence auditor independence and audit quality. The affected auditor independence and audit quality will trigger reflections from regulators, which is an output of auditor independence and audit quality.
2.3.1 Auditors (linkage 1)审计师
From the perspective of auditors, most literatures are concerned about the relationship between economic bonding and knowledge pill-over (see Chapter 3.1), which are usually assess by the association between audit and non-audit fees. In addition, auditors’ propensity to issue going-concern opinions is considered to be related with the level of their independence. Therefore, a number of researchers compare the circumstances of going-concern opinions issuance to assess whether auditor independence is affected by joint provisions of non-audit services (see Chapter 3.2).
2.3.2 Clients (linkage 2)客户
From the perspective of clients, cost of capital (including cost of debt and cost of equity) and earnings response coefficient (ERC) are considered as the market reaction to auditor independence because decisions from investors and other related parties are likely to change with their perceptions about the independence of auditors (see Chapter 4.1). Moreover, changes in corporate governance might also be regarded as proxies, for example, pre-approval on non-audit services of audit committees and shareholders’ voting against auditor ratifications (see Chapter 4.2).
2.3.3 Financial reporting users (linkage 3)财务报告使用者
From the perspective of financial reporting users, the financial reporting quality is the most important issue to them. Three proxies, discretionary accruals (see Chapter 5.1), financial statement restatements (see Chapter 5.2), and audit report lags (see Chapter 5.3) are applied to assess audit quality. Therefore, the fluctuations and changes caused by joint provisions of non-audit services can be used to measure level of auditor independence.#p#分页标题#e#
2.3.4 Regulators (linkage 4)监管机构
From the perspective of regulators, regulations are affected by situations of current economy, particularly audit scandals, such as Enron and WorldCom. In addition, the regulations and rules will also affect behaviours of auditors, clients, and financial reporting users. Three regulations related to non-audit services, i.e. U.S. Securities of Exchange Commission (2000, 2003) and the Sarbanes-Oxley Act of 2002 (SOX), will be discussed in this part.
2.4 Sources of prior literatures原始文献来源
In this paper, only published manuscripts are covered in this literature review. Key words, such as ‘non-audit services’, ‘auditor independence’, and ‘audit quality’ are used to search for relevant papers. Most researches in this paper are published in following leading journals related to auditing: Accounting, Organisations, and Society, Auditing: A Journal of Practice and Theory, Contemporary Accounting Research, Journal of Accounting, Auditing, and Finance, Journal of Accounting and Public Policy, Journal of Accounting Research, Review of Accounting Studies, and The Accounting Review. Therefore, the selection methods of prior literatures might cause the latest researches are not included as it usually takes more than one years before the papers to be published in journals. Due to the accessibility to working papers, not sufficient working papers are included in this literature review. However, this paper is attempting to include more reliable journals which have been reviewed by peers in order to provide a thorough introduction to the topic.
本文回顾了非审计服务对审计独立性和审计质量的影响。本文首先做了简介和四个利益相关者观点的总体框架。框架将描述非审计服务代理对审计独立性和审计质量 的评估影响，例如审计师的订单、客户、财务报告用户,和监管机构。接下来,细节将在以下章节中讨论研究人员使用代理来评估非审计服务的影响的各种观点，如审计师对于倾向持续经营的参考意见和财务报表的问题。最后,本研究将描述当前的论题和进一步的研究建议。本文献对联合审计和非审计服务的规定以及有关规定影响感兴趣的学者应该是有所帮助的，比如2000年的美国证券交易委员会和2003年2002年的萨班斯-奥克斯利法案。
Abstract
The paper reviews literatures on influences of non-audit services on auditor independence and audit quality. It is begun with a brief introduction and a general framework from the standpoints of four stakeholders. The framework will describe the proxies used to evaluate the influences of non-audit services on auditor independence and audit quality, in the order of auditors, clients, financial reporting users, and regulatory bodies. Next, detail discussions will present in the following chapters about the various views of researchers who use the proxies to evaluate the impact of non-audit services, such as auditors’ propensity to issue going-concern opinions and restatements of financial statements. Finally, existing limitations in this research will be described and suggestions for further research will be offered. The literature review is supposed to be useful to academics interested in impact of joint provisions of audit and non-audit services as well as to the relevant regulations, such as U.S Securities of Exchange Commission in 2000 and 2003 and Sarbanes-Oxley Act of 2002.
Contents
Chapter 1 Introduction…………………………………………………………………. 引言
Chapter 2 Framework for Research in Non-Audit Services…………………………..非审计服务的研究框架
2.1 Relevant definitions…………………………………………………………………相关定义
2.2 Conflict views of auditing regulators and professions……………………………...审计监管机构和职业冲突的观点
2.3 Framework for literature review research………………………………………....文献综述研究的框架
2.3.1 Auditors (linkage 1)……………………………………………………………审计师#p#分页标题#e#
2.3.2 Clients (linkage 2)……………………………………………………………..客户
2.3.3 Financial reporting users (linkage 3)…………………………………………..财务报告使用者
2.3.4 Regulators (linkage 4)…………………………………………………………监管机构
2.4 Sources of prior literatures………………………………………………………...原始文献来源
Chapter 1 Introduction引言
The discussion on joint provision of audit and non-audit services and whether it can adversely affect auditor independent and audit quality has been a controversial topic among academics, professions, and regulators for many years. The objective of this literature review is to review and synthesise the academic literatures on impact of non-audit services on auditor independence and propose suggestions for future research. To start this study, it is important to explain the definitions and perceptions of non-audit services, auditor independence, and audit quality. Because of different stakeholders have different concerns towards the association between non-audit services and audit quality and what indicators are appropriate to assess this association between joint provision of audit and non-audit services (Knechel et al., 2013), the study is arranged following this logic order. As it is widely presumed in regulators that the economic bonding resulting from auditor-provided non-audit services would compromise auditor independence thus impair audit quality, especially after the collapse of Enron and WorldCom, auditing professions tend to hold the opposite view as they emphasise the importance of knowledge spill-over impact of joint provisions of audit and non-audit services. In academic research, the impact of non-audit services provided by incumbent auditors on auditor independence and audit quality is mixed and elusive. Therefore, academic researchers have been examining such impact in order to give guidance on auditing professions and regulations.
To reconcile different viewpoints, and to understand how non-audit services affect auditor independence and audit quality, a general framework is firstly adopted through which the overall links between specific proxies are illustrated to get a better understanding of this study. This research intends to investigate the various literatures using different proxies to evaluate auditor independence and audit quality from the perspectives of auditors, clients, financial reporting users, and regulators. These proxies are considered to be reliable to assess auditor independence and audit quality, such as non-audit fee ratios, auditors’ propensity to issue going-concern opinions, cost of capital of clients’ companies, discretionary accruals, and restatements of financial reporting. Therefore, according to survey, experiment or archival research, researchers have provided their findings about the relationship between non-audit services and auditor independence or audit quality, most of which are inconsistent and includes positive, negative and no association.#p#分页标题#e#
This study is supposed to contribute to existing research. First, a general framework is developed to connect viewpoints of stakeholders and relevant proxies to evaluate their opinions. These proxies link the stakeholders’ views to auditor independence and audit quality. Second, this literature review adds to existing academics on this topic, especially non-audit services are usually considered as a part of literature reviews on audit quality. Thus, this study provides a detailed research which specifies on non-audit services. Third, apart from literature reviews on existing academics, current regulations and the development of such regulations are also analysed in detail. Therefore, this study are tend to be useful to academic researchers, auditing professions, regulators, investors, and those who are interested in understanding the impact of non-audit services provided by incumbent auditors on auditor independence and audit quality.
The reminder of this literature-review-based research is organised in the following order: Chapter 2 will illustrate a general framework for non-audit services research, which will provide the basic clue for the following research. Then the next four chapters (from 3 to 6), will cover prior literatures from perspectives of auditors, clients, financial reporting, and regulatory bodies respectively. These chapters are closely related to the framework figure stated in Chapter 2. The next chapter is total conclusion of the papers, which encompass limitations of this literature review on non-audit services and propose suggestions about the directions for the further research.
Chapter 2 Framework for Research in Non-Audit Services非审计服务的研究框架
As the Supreme Court Chief Justice in charge of the case about United States versus Arthur Young Corporation, Warren Burger emphasises the extreme importance of independence to an auditor and describes the auditors act as a watchdog which is key to operation efficiency and public trust in capital markets in the following statement:
“…this ‘public watchdog’ function demands that the accountant maintain total independence from the client at all times and requires complete fidelity to the public trust.”
Considering the importance of auditor independence, it is worthy further examination about whether joint provisions of non-audit services will impair auditor independence thus subsequently affect audit quality. This part is arranged as follows: relevant definitions about ‘auditor independence’, ‘audit quality’, and ‘non-audit services’ will be discussed first. Then conflicts of views will be discussed briefly. In addition, an illustration of framework of total literature reviews will be provided and relevant proxies used will be introduced, followed by a brief introduction about the source of previous literatures.
2.1 Relevant definitions相关定义 #p#分页标题#e#
There are a numbers of definitions towards auditor independence and audit quality. However, auditor independence is not specified defined but normally related with concept of audit quality. Audit quality is generally defined as “the market assessed joint probability that a given auditor will both (a) discover a breach in the client’s accounting system, and (b) report the breach” (DeAngelo, 1981). This definition is often interpreted to break audit quality down into two components: (1) the likelihood that an auditor discovers existing material misstatements and (2) appropriate actions that have been taken on this breach.
In the context of the research focus, non-audit services are refined as auditor-provided non-audit services, which have the importance of necessary to seek its effects on auditor independence and audit quality. The scope of non-audit services defined in the Sarbanes-Oxley Act of 2002 (SOX) is as follows: bookkeeping or other services related to the accounting records or financial statements of the audit client; financial information systems design and implementation; appraisal or valuation services, fairness opinions, or contribution-in-kind reports; actuarial services; internal audit outsourcing services; management functions or human resources; broker or dealer, investment advisor, or investment banking services; legal services and expert services unrelated to the audit.
2.2 Conflicts views of auditing regulators and professions审计监管机构和职业冲突的观点
It is widely accepted in perspectives of regulators that strict rules and regulations should be in place to guarantee the independence status of auditors. Bazerman and Moore (2011) propose two extreme alternatives to help the auditing system maintain their independence: (A) in order to maintain auditors’ independence both in appearance and in fact, ban all non-audit services provided by the incumbent auditors to their clients, jobs taken with clients, or durable long-term partnerships with their clients; or (B) agree incumbent auditors to provide all non-audit services to the clients for the purpose of fulfilment clients’ needs, then attempt to establish a set of complicated legislative and professional motivations to overcoming the corrupting impacts derived by the desire of the auditors to meet their clients’ needs. It seems that auditing regulators regard option (B) has the potential guarantee to maintaining auditor independence. In practice, most non-audit services are banned by the Sarbanes-Oxley Act of 2002 (SOX).
However, audit professions are more likely to balance the costs and benefits of joint provisions of non-audit services and they prefer to accept the notion that auditor independence can avoid to be compromised if appropriate controls are in place. In addition, they argue that the appropriate explanation of non-audit services provided by incumbent auditors is their knowledge spill-over or synergies effects, i.e. experience gained from one function can promote performing for other tasks (Krishnan and Yu, 2011).#p#分页标题#e#
Therefore, a longstanding debate has continued among different stakeholders, such as auditing professions and regulators, on the impact of non-audit services provided by incumbent auditors. Academics have more concerned on this important issue and it is worthy an overall discussion about their views for better investigation of future research, which can also promote the developments of relevant regulations.
2.3 Framework for literature review research文献综述研究的框架
There is generally framework which provided a logic line for reviews of prior literatures, which is illustrated as follows:
In order to examine the effects of non-audit services provided by incumbent auditors on auditor independence and audit quality, various proxies are applied in both empirical and archival researches. From the different perspectives of stakeholders, different proxies are adopted relevant to their own incentives and perceptions, which will be discussed below. The perspectives of auditors, clients, and financial reporting users are input which will influence auditor independence and audit quality. The affected auditor independence and audit quality will trigger reflections from regulators, which is an output of auditor independence and audit quality.
2.3.1 Auditors (linkage 1)审计师
From the perspective of auditors, most literatures are concerned about the relationship between economic bonding and knowledge pill-over (see Chapter 3.1), which are usually assess by the association between audit and non-audit fees. In addition, auditors’ propensity to issue going-concern opinions is considered to be related with the level of their independence. Therefore, a number of researchers compare the circumstances of going-concern opinions issuance to assess whether auditor independence is affected by joint provisions of non-audit services (see Chapter 3.2).
2.3.2 Clients (linkage 2)客户
From the perspective of clients, cost of capital (including cost of debt and cost of equity) and earnings response coefficient (ERC) are considered as the market reaction to auditor independence because decisions from investors and other related parties are likely to change with their perceptions about the independence of auditors (see Chapter 4.1). Moreover, changes in corporate governance might also be regarded as proxies, for example, pre-approval on non-audit services of audit committees and shareholders’ voting against auditor ratifications (see Chapter 4.2).
2.3.3 Financial reporting users (linkage 3)财务报告使用者
From the perspective of financial reporting users, the financial reporting quality is the most important issue to them. Three proxies, discretionary accruals (see Chapter 5.1), financial statement restatements (see Chapter 5.2), and audit report lags (see Chapter 5.3) are applied to assess audit quality. Therefore, the fluctuations and changes caused by joint provisions of non-audit services can be used to measure level of auditor independence.#p#分页标题#e#
2.3.4 Regulators (linkage 4)监管机构
From the perspective of regulators, regulations are affected by situations of current economy, particularly audit scandals, such as Enron and WorldCom. In addition, the regulations and rules will also affect behaviours of auditors, clients, and financial reporting users. Three regulations related to non-audit services, i.e. U.S. Securities of Exchange Commission (2000, 2003) and the Sarbanes-Oxley Act of 2002 (SOX), will be discussed in this part.
2.4 Sources of prior literatures原始文献来源
In this paper, only published manuscripts are covered in this literature review. Key words, such as ‘non-audit services’, ‘auditor independence’, and ‘audit quality’ are used to search for relevant papers. Most researches in this paper are published in following leading journals related to auditing: Accounting, Organisations, and Society, Auditing: A Journal of Practice and Theory, Contemporary Accounting Research, Journal of Accounting, Auditing, and Finance, Journal of Accounting and Public Policy, Journal of Accounting Research, Review of Accounting Studies, and The Accounting Review. Therefore, the selection methods of prior literatures might cause the latest researches are not included as it usually takes more than one years before the papers to be published in journals. Due to the accessibility to working papers, not sufficient working papers are included in this literature review. However, this paper is attempting to include more reliable journals which have been reviewed by peers in order to provide a thorough introduction to the topic.
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