Auditor independence and fee independence
This study investigates whether fee dependence within the audit firms' offices jeopardisesauditor independence. Fee dependence is examined at both the national audit firm level as well asthe local office level and in a setting where public disclosure of fees is mandatory. We focus ourtests on audit fee dependence and at the same time we control for the effects of non-audit servicefee dependence post the 1989 mergers. We operationalise the exercise of independent judgementin auditing by the propensity to issue qualified audit opinions. If fee dependence affects auditors'independent judgement, then auditors are less likely to qualify the accounts. The study's resultsshow that the level of auditor fee dependence does not affect auditor propensity to issueunqualified audit opinions. The findings remain robust to a number of sensitivity tests includingthe analyses controlling for the effects of non-audit service fee dependence and other settings inwhich there is heightened pressure on auditors to confront the effects of fee dependence onexercising independent audit judgement.
|Year of publication:||
|Authors:||Stokes, D. J ; Laughton, J. ; Craswell, A.|
|Type of publication:||Other|
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