Non‐Audit Fees and Auditor Independence: New Evidence Based on Going Concern Opinions for U.S. Companies Under Stress

2010 ◽  
Author(s):  
Paul A. Griffin ◽  
David H. Lont
Keyword(s):  
Audit Fees ◽  
Auditor Independence ◽  
Evidence Based ◽  
Going Concern ◽  
New Evidence

Going-Concern Audit Opinions and the Provision of Nonaudit Services: Implications for Auditor Independence of Bankrupt Firms

2009 ◽  
Vol 28 (1) ◽  
pp. 153-169 ◽  
Author(s):  
Joseph Callaghan ◽  
Mohinder Parkash ◽  
Rajeev Singhal
Keyword(s):  
Negative Relationship ◽  
Audit Fees ◽  
Managerial Incentives ◽  
Auditor Independence ◽  
Empirical Question ◽  
Going Concern ◽  
Nonaudit Services ◽  
Auditor Fees ◽  
The Relationship ◽  
The U.S

SUMMARY: Researchers in the area of auditor independence have examined the relationship between auditors' opinions and auditor-provided services. While DeFond et al. (2002) and Geiger and Rama (2003) fail to find auditor impairment for distressed U.S. companies, Sharma (2001) and Sharma and Sidhu (2001) find a negative relationship between the likelihood of a going-concern (GC) opinion and nonaudit fees paid to auditors for bankrupt Australian companies. These conflicting results may arise from jurisdictional differences between Australia and the U.S. or differential managerial incentives and firm costs between distressed and bankrupt firms. In light of these differences, an empirical question exists as to whether the results of the Australian studies will obtain in the U.S. We examine the relationship between the propensity of auditors to render GC opinions and nonaudit fees (and other auditor fees) for a sample of bankrupt U.S. firms. We do not observe any association between GC opinions and nonaudit fees, audit fees, total fees, or the ratio of nonaudit fees to total fees.

Auditor Fees and Auditor Independence—Evidence from Going Concern Reporting Decisions in Germany

2013 ◽  
Vol 32 (4) ◽  
pp. 129-168 ◽  
Author(s):  
Nicole V. S. Ratzinger-Sakel
Keyword(s):  
Audit Quality ◽  
Audit Fees ◽  
Auditor Independence ◽  
Litigation Risk ◽  
Manufacturing Companies ◽  
Anglo Saxon ◽  
Going Concern ◽  
Big 4 ◽  
Reporting Decisions ◽  
Auditor Fees

SUMMARY This study examines the potential for non-audit services to impair auditor independence using going concern modifications as a proxy for audit quality. While prior research has focused primarily on Anglo-Saxon environments, this study focuses on Germany because of the country's unique reporting attributes and lower litigation risk when compared to Anglo-Saxon settings. Based on a sample of financially stressed manufacturing companies during the period 2005–2009, the results do not suggest that German auditors are less independent when the level of non-audit fees is high. However, there is some evidence that Big 4 audit firms are less likely than their non-Big 4 counterparts to issue a going concern emphasis-of-matter paragraph for engagements characterized by both relatively high levels of non-audit fees and financial stress.

scholarly journals Auditor Fees and Going-Concern Reporting Decisions on Bankrupt Companies: Additional Evidence

2015 ◽  
Vol 9 (1) ◽  
pp. A13-A27 ◽  
Author(s):  
William J. Read
Keyword(s):  
Audit Fees ◽  
Auditor Independence ◽  
Data Availability ◽  
Audit Failure ◽  
The Public ◽  
Going Concern ◽  
Audit Firms ◽  
Public Company ◽  
Reporting Decisions ◽  
Auditor Fees

SUMMARY The recent growth in non-audit services (NAS) at the major audit firms has the attention of auditing regulators. On several occasions recently, board members of the Public Company Accounting Oversight Board (PCAOB) have indicated that the rise in NAS may place auditor independence at risk (Harris 2014; Tysiac 2014). Impaired independence can result in audit failure, which includes situations when auditors fail to issue going-concern (GC) audit opinions to soon-to-be bankrupt companies. In this paper, I examine the association between the propensity of auditors to issue GC opinions and NAS fees (and audit fees) to 203 bankrupt companies during 2002–2013. In analysis, I find no significant relation between GC decisions and NAS fees and audit fees. My results may interest U.S. regulators, who recently expressed concerns about the threat to auditor independence from the spike in NAS at the major firms. Data Availability: Publicly available from sources identified in the paper.

Political connections, political corruption and auditing: a literature review

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Imen Khelil ◽  
Hichem Khlif ◽  
Ines Amara
Keyword(s):  
Economic Effect ◽  
Political Corruption ◽  
Audit Fees ◽  
Auditor Independence ◽  
Political Connections ◽  
Future Research ◽  
Content Type ◽  
Audit Opinion ◽  
Going Concern ◽  
The Us

Purpose Given the interest in better understanding the economic effects of political connections and political corruption on auditor behavior, this paper aims to review empirical studies in the accounting and finance domain dealing with these topics. Design/methodology/approach Keywords used to search for relevant studies include “political connections or political corruption” with “audit fees, audit report lag, audit independence and audit opinion.” This paper consults several editorial sources including Elsevier, Electronic Journals Service Elton B. Stephens Company, Emerald, Springer, Palgrave Macmillan, Sage, Taylor and Francis and Wiley-Blackwell. The search yields 16 published studies since 2006. Findings The review reveals that the majority of studies dealing with the economic effect of political connections are conducted in an Asian setting. Political connections increase the likelihood of receiving a favorable audit opinion and they are associated with higher audit fees longer audit delays. However, they can compromise auditor independence. Studies dealing with the economic consequences of political corruption on auditing are mostly based in the US setting. The findings of the reviewed studies suggest that political corruption is associated with higher audit fees, longer audit delays and increases the likelihood of receiving a going concern audit opinion. Practical implications The synthesis suggests that political connections can adversely (compromise auditor independence) or beneficially (reduce the likelihood of issuing a going concern audit opinion) impact auditor behavior depending on the legal, institutional and cultural characteristics prevailing in a particular setting. Political corruptions increase audit assessed risks leading to a higher probability of issuing a going concern audit opinion and increased audit effort (audit fees and audit delays). It should be noted here that the literature linked to political corruption and auditor behavior is still in its infancy and much remains to be learnt if this stream of research is examined outside the US setting. Originality/value The review discusses the political connections and political corruption literature specifically devoted to auditor behavior. It identifies some limitations of this literature and offers guidance for future research avenues.

Clients' Workplace Environment and Corporate Audits

2017 ◽  
Vol 36 (4) ◽  
pp. 89-113 ◽  
Author(s):  
Minjie Huang ◽  
Adi Masli ◽  
Felix Meschke ◽  
James P. Guthrie
Keyword(s):  
Audit Fees ◽  
Risk Assessments ◽  
Audit Report ◽  
Accounting Firms ◽  
Workplace Environment ◽  
Workplace Satisfaction ◽  
Going Concern ◽  
Corporate Executives ◽  
Workplace Environments ◽  
Jel Classifications

SUMMARY We obtain a novel dataset of workplace satisfaction ratings submitted by about 100,000 employees working for large public U.S. companies. We document that lower workplace ratings are associated with higher audit fees and longer audit report lags. Lower workplace ratings also increase the likelihood of firms receiving modified going concern opinions. Our study shows that organizational workplace environments affect auditor risk assessments and auditing outcomes and provide insights for practicing auditors and corporate executives. Our interviews with practicing auditors at large U.S. accounting firms also provide insights as to how workplace quality affects the corporate audit. JEL Classifications: G3; J28; M14; M42.

Factors Associated with the Early Adoption of the SEC's Revised Auditor Fee Disclosure Rules

2006 ◽  
Vol 25 (2) ◽  
pp. 41-51 ◽  
Author(s):  
Sharad Asthana ◽  
Jayanthi Krishnan
Keyword(s):  
Audit Fees ◽  
Auditor Independence ◽  
Securities And Exchange Commission ◽  
Factors Associated ◽  
Disclosure Requirements ◽  
Early Adoption ◽  
Disclosure Rules ◽  
Definition Of ◽  
Auditor Fees ◽  
Considerable Concern

Corporate disclosures of auditor fees (beginning in February 2001) caused considerable concern among regulators and investors about auditor independence because they revealed that nonaudit fees were a substantial proportion of total auditor fees. However, in 2003 the Securities and Exchange Commission (SEC) introduced revised disclosure requirements, specifying a broader definition of audit fees, and additional fee categories (SEC 2003). About 31 percent of our sample firms adopted the new rules in advance of the required date. We investigate the pattern of early adoption of the new fee disclosure rules by companies. Our results indicate that companies with greater nonaudit fee ratios during the prior year, companies that could show a greater decline in nonaudit fee ratios due to reclassification under SEC (2003), and companies that had greater audit-related fees after the reclassification were likely to adopt the new rules early. We conjecture that companies that had the most to gain from reclassifying fees—possibly by reducing negative investor perceptions about nonaudit services—adopted the new rules earlier than required.

The Relation between Managerial Ability and Audit Fees and Going Concern Opinions

2014 ◽  
Vol 34 (3) ◽  
pp. 139-160 ◽  
Author(s):  
Gopal V. Krishnan ◽  
Changjiang Wang
Keyword(s):  
Empirical Evidence ◽  
Audit Fees ◽  
Managerial Ability ◽  
Firm Level ◽  
Going Concern ◽  
Going Concern Opinion ◽  
Corporate Resources ◽  
Ability Measure

SUMMARY While prior research has examined the relation between firm-level attributes and auditors' decisions, there is little empirical evidence on whether managerial attributes are informative to auditors. We examine the relation between managerial ability, i.e., ability in transforming corporate resources to revenues, and audit fees and a going concern opinion. We use the managerial ability measure recently developed by Demerjian, Lev, and McVay (2012). We find that incremental to firm-level attributes, both audit fees and the likelihood of issuing a going concern opinion are decreasing in managerial ability. Collectively, our findings support the notion that managerial ability is relevant to auditors' decisions.

scholarly journals Ethnomedicinal Uses of Honeybee Products in Lithuania: The First Analysis of Archival Sources

2016 ◽  
Vol 2016 ◽  
pp. 1-7 ◽  
Author(s):  
Zivile Pranskuniene ◽  
Jurga Bernatoniene ◽  
Zenona Simaitiene ◽  
Andrius Pranskunas ◽  
Tauras Mekas
Keyword(s):  
Folk Medicine ◽  
Evidence Based ◽  
Ethnomedicinal Uses ◽  
New Evidence ◽  
Preparation Techniques ◽  
Standardization Methods ◽  
Different Parts

Lithuania has old ethnomedicine traditions, consisting of many recipes with herbal, animal, and mineral original ingredients. All these findings were mostly collected in Lithuanian language, often in local community’s dialects, and stored only in archives. We analyzed archival sources about honeybee and its products used for medicinal purposes dated from 1886 till 1992 in different parts of Lithuania. We systematized and presented the most important information about bees and their products: indication for usage, ingredients used in the recipe, their preparation techniques, and application for therapeutic purposes. Researchers in Lithuania are now looking for new evidence based indications and preparation and standardization methods of bee products. Archival sources are a foundation for studies in Lithuania. The results can be integrated into scientifically approved folk medicine practices into today’s healthcare.

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