The effect of Non-Audit services (NAS) on external auditor independence
An empirical study on accounting and auditing firms in Tripoli
DOI:
https://doi.org/10.59743/jaf.v4i1.125Abstract
this study aims to examine the effect of Non-Audit services (NAS) on auditor independence that Libyan external auditors provide to their audit clients, to achieve this aim, the study was divided into four sections. The problem of the research and its objective, and importance was announced in the first section. The second section was dedicated to build the theoretical framework of the research. The third section illustrates the empirical part of the study, Finally, a summary of the main results and a possible recommendations are provided in the fourth section.
Based on the statistical analysis of gathered data, the results of this study indicated that: Auditor independence was extremely effected by the provision of Non-Audit services (NAS) due to several reasons such as: increase of economical bond between auditors and their audit clients, high percentage of income from (NAS) compared to income from normal audit services, auditors become more interested and supportive of their audit client management benefits than shareholders benefits, auditors become more dependent on their audit client management success for building their reputation. Furthermore, the results revealed that there were no statistical significant differences between responses of the participants of the study regarding the effect of provision of (NAS) on auditor independence in terms of their qualifications or work experience.
Downloads
References
أحمد الزهار، "أثر الخدمات الأخرى التي يقدمها مراجع الحسابات بجانب خدمة المراجعة على جودة تقرير المراجع"، رسالة ماجستير منشورة، كلية التجارة، الجامعة الإسلامية بغزة، فلسطين (2013).
أحمد حلمي جمعة، " التدقيق والتأكيد الحديث – المشاكل والمسؤوليات – الأدوات والخدمات"، دار صفاء للنشر والتوزيع، طبعة 2009.
بوبكر شريعة وأسماء كويري، " توافر متطلبات معايير الأداء المهني للخدمات الاستشارية للمراجع الخارجي المقدمة للمصارف التجارية الليبية"، مجلة جامعة البحر المتوسط الدولية، العدد الثاني، بنغازي، ليبيا مارس 2017.
فوزية حامد وحسام، " اتجاه مكاتب المراجعة في المملكة العربية السعودية نحو توسيع نطاق خدماتها المهنية: تحليل ميداني مستند إلى متطلبات نظرية الوكالة"، مجلة جامعة الملك عبدالعزيز، كلية الاقتصاد والإدارة مجلد 21، العدد الثاني، جدة، السعودية (2007).
قريط عصام، "الخدمات الاستشارية واثرها على حياد المدقق في الأردن"، مجلة جامعة دمشق للعلوم الاقتصادية والقانونية، المجلد 24، العدد الأول، كلية الاقتصاد، جامعة دمشق، سوريا (2008).
اللائحة التنفيذية للقانون رقم (116) لسنة 1973.
مجلس قيادة الثورة، قانون تنظيم مزاولة مهنة المحاسبة والمراجعة في ليبيا رقم (116) لسنة 1973.
موسى علي، "استقلالية المراجع الخارجي بين النظرية والتطبيق"، رسالة ماجستير غير منشورة، جامعة قاريونس، كلية الاقتصاد، بنغازي، ليبيا، 1992.
Alleyne, P. A. Devonish, D. and Alleyne, P. (2006 a), “Perceptions of auditor independence in Barbados”, Managerial Auditing Journal, Vol. 21, No. 6, pp. 621-635.
Almalhuf, B. A. (2014), “Perceptions of Libyan external auditor independence”, National Magazine of managment, Tripoli, Libya, No 13, PP5- 40.
American Institute of Certified Public Accountants. (1978), Commission on Auditors’ Responsibilities: Report, Conclusion, and Recommendations, AICPA: New York.
Arrunada, B. (1999), “The provision of non-audit services by auditors let the market evolve and decide”, International Review of Law and Economics, Vol. 19, pp. 513-531.
Auditing Practices Board, Ethical Standards (2004).
Awadallah, E. (2006), “Investigating professional auditor’ perceptions of factors affecting their ability to resist client management pressure in audit disputes”, accounting, auditing and performance evaluation, Vol. 3, No. 2, pp. 220-239.
Beattie, V. Brandt, R. and Fearnley, S. (1999), “Perceptions of auditor independence: UK. Evidence”, Journal of International Accounting, Auditing & Taxation, Vol. 8, No. 1, pp 57-107.
Boritz, J. E. (1992), “Discussion of expert and novice problem-solving behaviour in audit planning”, Auditing Journal of Practice & Theory, Vol. 11, supplement. pp. 22-32.
Canning, M. and Gwilliam, D. (1999), “Non-audit services and audit independence: Some evidence from Ireland”, the Accounting Review, Vol. 8, No. 3, pp. 401-411.
Carey, J. and Doherty, W. O. (1966), “The concept of independence-review and restatement”, the Journal of Accountancy, January, pp. 38-48.
Clikeman, P. M. (1998), “Auditor independence: Continuing controversy”, Ohio CPA Journal, Vol. 57, Issue. 2.
Defond, M. L. Raghunandan, K. and Subramanyam, K. R. (2002), “Do non-audit services fees impair auditor independence? Evidence from going concern audit opinions”, Journal of Accounting Research, Vol. 40, No. 4, pp. 1247-1274.
European Parliament & the Council. (2014). Regulation (EU) No 537/2014 of the European Parliament and of the Council. Brussels: European Parliament & the Council.
Firth, M. (2002), “Auditor-provided consultancy services and their association with audit fees and audit opinions”, Journal of Business, Finance & Accounting, Vol. 29. No. 5/6. pp. 661-693.
Flint, D. (1988), “Philosophy and procedures of auditing: an introduction”, Macmillan, London.
Goldman, A. and Barlev, B. (1974), “The auditor-firm conflict of interests: Its implications for independence”, the Accounting Review, Vol. 49, No. 4, pp. 707-718.
Grout, P. Jewitt, I. Ping, C. and Whittington, G. (1994), “Auditor professional judgment: Implications for regulation and the law”, Economic Policy, October, pp. 308-351.
Gul, F. A. (1989), “Bankers’ perception of factors affecting auditor independence”, Accounting, Auditing & Accountability Journal, Vol. 2, No. 3, pp. 40-51.
Gul, F. A. Jaggi, B. L. and Krishnan. G. V. (2007), “Auditor independence: Evidence on the joint effects of auditor tenure and non-audit fees”, Auditing: A Journal of Practice & Theory, Vol. 26, No. 2, pp. 117-142.
Harriet, A. (2014, 12 22). UK accountancy watchdog hits PwC with two separate probes. Financial Times
Higgins, T. G. (1962), “Professional Ethics: A time for reappraisal”, the Journal of Accountancy, March, pp. 29-35.
Hudaib, M. (2003), “Understanding auditor independence in Saudi Arabia: perceptions of selected groups of auditors and users”, unpublished PhD Thesis, University of Essex, Colchester.
Jenkins, D. S. and Velury, U. (2008), “Does auditor tenure influence the reporting of conservative earnings?” Journal of Accounting and Public Policy, Vol. 27, pp. 115-132.
Mautz, R. K. and Sharaf, H. A. (1961), “The Philosophy of Auditing”, American Accounting Association, New York.
Niemi, L. (2004), “Auditor size and audit pricing: Evidence from small audit firm”, European Accounting Review, Vol. 13, No. 3, pp. 451-560.
Pallant, J. (2007), “SPSS survival manual”, Open University Press, Buckingham.
Petty, R. and Cuganesan, S. (1996), “Auditor rotation: Framing the debate”, Australian Accountant, Vol. 66, No. 4, pp. 40-42.
Sarantakos, A. (1998), Social research”, second edition, Macmillan Press, London.
Sarbanes-Oxley Act (2002).
Sekaran, U. (2003), “Research methods for business”, Fourth Edition, John Wiley &Songs, Inc.
Shockley, R. (1982), "Perceptions of auditor independence; A conceptual model", Journal of Accounting, Auditing & Finance, PP, 126-143. Sonja Elisabeth Oberleitner, (2017), "The impact of auditor rotation on audit quality", Master thesis, Umeå university, School of Business and Economics, Sweden.
Wines, G. (2006), “The connotative meaning of independence in alternative audit context: An exploratory study”, Pacific Accounting Review, Vol. 18, No. 1, pp. 90-122.
Downloads
Published
License
Copyright (c) 2020 Journal of the Academic Forum
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.
