EFFECTS OF NON-AUDIT SERVICES ON AUDIT
ABSTRACT
This research paper investigates the effect of non-audit services on auditor independence, and the importance of non-audit services as a source of income for audit firms in the Nigeria. There is a positive relationship between audit fees and the purchase of both recurring and non-recurring non-audit services at the same time. When two-stage least squares are used to control for joint determination of audit services and non-audit services, there is no relationship. The lack of relationship (or positive relationship) is consistent with previous studies in this area and the results of the non-recurring non-audit services support. The study’s findings are that companies that purchase either type of non-audit services are significantly larger than those that do not purchase non-audit services. Tax services tend to be recurring, while consulting services do not. The results show that recurring non-audit services are positively related to audit fees, while non-recurring non-audit services exhibit no relation to audit fees.
CHAPTER ONE
1.0 Introduction
1.1 Background of Study
The issue of non-audit services provided by auditors, and whether these services have an effect on auditor independence, continues to be controversial (e.g. Hodge and Murray 2012; Mason 2012). Regarding the audit market, most European Member States have high concentration levels even though it has decreased since 2004. Studies calculated on concentration levels of the European statutory audit markets for firms listed on regulated national stock exchange, by turnover, showed that 19 out of 21 Member States are highly concentrated.
Previous studies have argued that recurring and non-recurring non-audit services could have different effects on auditor independence. Schneider et al. (2006) identify empirical work that provides conflicting evidence with some studies suggesting that there are more independence problems for non-recurring non-audit services (Beck et al. 1988a), while others indicate that it is the recurring services that provide the greater independence problem (Beck et al. 1988b; Abbott et al. 2007). The purpose of this study is to examine the effect of recurring and non-recurring non-audit services fees on audit fees in order to explore the issue of non-audit services and the potential loss of independence.
Previous research into the determinants of audit fees generally uses aggregated non-audit fees due to a lack of access to information about recurring or non-recurring services. However, from 1995 onwards, New Zealand companies have been required to disclose the amount paid for non-audit fees in the financial statements and auditors have provided a brief classification of those non-audit services in the audit report. This provides a unique advantage for this study in that information about the type of non-audit services can be identified. We use that data to examine whether companies purchasing recurring non-audit services are different from those that purchase non-recurring non-audit services, or those that do not purchase non-audit services. We then examine which types of service are recurring, and whether either type of non-audit service is associated with lower audit fees.
The core problem associated to non-audit services is its effect on auditors’ independence. For instance, many researchers argue that independence can be threatened by the relationship between the auditor and the audited client when providing non-audit services (Schneider, Church, & Ely, 2006 etc).
1.2 Statement of Problems
Investigation reveals the following problems of the Effects of Non-audit Services on Audit research work;
There is a positive relationship between audit fees and the purchase of both recurring and non-recurring non-audit services at the same time. When two-stage least squares are used to control for joint determination of audit services and non-audit services, there is no relationship. The lack of relationship (or positive relationship) is consistent with previous studies in this area and the results of the non-recurring non-audit services support Beck et al.’s (1988a) suggestion of a lack of incremental bonding.
The issue of non-audit services provided by auditors, and whether these services have an effect on auditor independence, continues to be controversial. This reasoning is convincing when considering the Tesco scandal, since the amount of NAS provided to the company, in exchange with high non-audit fees (NAF) to the auditor, probably had an impact on the extensive auditor tenure. Consequently, this raised awareness to issues regarding auditors’ independence and their capability to encounter long-lasting clients, from which they incur significant amount of income (Harriet, 2014).
1.3 Purpose of Study
The purpose of this study is to investigate the effect of non-audit services on auditor independence, and the importance of non-audit services as a source of income for audit firms in the Nigeria.
1.4 Research Questions
The following are the questions of the research work;
- How do NAS affect auditor independence?
- In what way do different NAS affect auditor independence?
- Is there a difference between companies buying non-audit services and those that do not buy non-audit services?
- Is there a relation between recurring non-audit fees and audit fees?
1.5 Research Hypothesis
The following are the questions of the research work;
Hypothesis One
H0: There is no relation between recurring non-audit fees and audit fees
H1: There is a relation between recurring non-audit fees and audit fees
Hypothesis Two
H0: There is no difference between companies buying non-audit services and those that do not buy non-audit services
H1: There is a difference between companies buying non-audit services and those that do not buy non-audit services
1.6 Scope of Study
The study focuses on the Effects of Non-audit Services on Audit.
1.7 Limitations of the Study
During the course of this study, many things militated against its completion, some of which are:
- Time Constraint: The time frame given to accomplish this project was very short due to school academic calendar and it was carried out under pressure which made the researcher not to implement some necessary features.
- Establishment Policies: Establishment policies posed a serious limitation as most staffs are not ready to release information needed for this project work. There were lots of information needed from the staffs of this institution to enhance the study which took them time to release or they did not release at all for security purposes, hence the scope was reduced.
- Research material: availability of research material is a major setback to the scope of the study.
- Frequent power failure: This made the researcher append more money on fuel to ensure sustainable power.
- Financial Constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).
1.8 Significance of Study
The study’s findings are that companies that purchase either type of non-audit services are significantly larger than those that do not purchase non-audit services. Tax services tend to be recurring, while consulting services do not. The results show that recurring non-audit services are positively related to audit fees, while non-recurring non-audit services exhibit no relation to audit fees.
Beside, the study will serve as reference material for subsequent researcher in the field or related topics.
CHAPTER TWO
2.0 Literature Review
2.1 Introduction
The review of relevant literature is the main topic of this chapter. A literature review covers theoretical and methodological contributions to a certain issue in addition to the state of knowledge at the time of writing. It provides information about the state of the art in relation to the subject you are writing about. It examines the body of work on the chosen subject. The literature evaluation in this study comprises the …
Procedure for Downloading the PDF (Docx) Material
Effects of Non-audit Services on Audit can be downloaded by requesting the full set of materials at the project or seminar cost. The document will be sent via Microsoft Word (MS-Word) format via WhatsApp (e-mail) following payment confirmation.
| Seminar Material Cost ₦3,000 | Project Material Cost ₦5,000 |
Request Complete Material
 | Click here to request the Complete Material via WhatsApp including;
|
TABLE OF CONTENTSPRELIMINARY PAGES
- Title page
- Approval page
- Dedication
- Acknowledgement
- Table of Contents
- Abstract
INTRODUCTION
- 1.0 Introduction
- 1.1 Background …
- ⋮
LITERATURE REVIEW
- 2.1 Introduction
- 2.2 Conceptual Review
- 2.3 Theoretical Framework
- ⋮
- 2.4 Empirical Studies
- 2.5 Research Gaps
- 2.6 Summary of Literature Review
CHAPTER THREE
RESEARCH METHODOLOGY
- 3.1 Introduction
- 3.2 Research Design
- 3.3 Population of Study
- 3.4 Sampling and Sampling Technique
- 3.5 Validation of Research Instrument
- 3.6 Method of Data Collection
- 3.7 Method of Data Analysis
- 3.8 Questionnaire Administration
- 3.9 Ethical Consideration
- 3.10 Statistical Analysis
CHAPTER FOUR
DATA ANALYSIS, RESULT AND DISCUSSION
- 4.1 Introduction
- 4.2 Presentation and Analysis of Data
- 4.3 Re-statement of Research Questions
- 4.4 Test of Hypotheses
- 4.5 Discussion of Findings
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
- 5.1 Introduction
- 5.2 Summary of Findings
- 5.3 Conclusion
- 5.4 Recommendation
- 5.5 Suggestion for Further Study
REFERENCES
APPENDIX A - “QUESTIONNAIRE”
Disclaimer for Complete Material Utilization
The displayed research work titled "Effects of Non-audit Services on Audit" is stated as a research guideline towards accomplishing your assigned project / seminar research work. All the research materials on this website are ONLY for research purposes and should be used as a guideline in developing your research work. For no reason should you copy word for word as projectlist.com.ng will not be liable for any who copied the material. By ordering the complete research guideline, it signifies that you've accepted our terms of service.
PRELIMINARY PAGES
- Title page
- Approval page
- Dedication
- Acknowledgement
- Table of Contents
- Abstract
INTRODUCTION
- 1.0 Introduction
- 1.1 Background …
- ⋮
LITERATURE REVIEW
- 2.1 Introduction
- 2.2 Conceptual Review
- 2.3 Theoretical Framework
- ⋮
- 2.4 Empirical Studies
- 2.5 Research Gaps
- 2.6 Summary of Literature Review
CHAPTER THREE
RESEARCH METHODOLOGY
- 3.1 Introduction
- 3.2 Research Design
- 3.3 Population of Study
- 3.4 Sampling and Sampling Technique
- 3.5 Validation of Research Instrument
- 3.6 Method of Data Collection
- 3.7 Method of Data Analysis
- 3.8 Questionnaire Administration
- 3.9 Ethical Consideration
- 3.10 Statistical Analysis
CHAPTER FOUR
DATA ANALYSIS, RESULT AND DISCUSSION
- 4.1 Introduction
- 4.2 Presentation and Analysis of Data
- 4.3 Re-statement of Research Questions
- 4.4 Test of Hypotheses
- 4.5 Discussion of Findings
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
- 5.1 Introduction
- 5.2 Summary of Findings
- 5.3 Conclusion
- 5.4 Recommendation
- 5.5 Suggestion for Further Study
REFERENCES
APPENDIX A - “QUESTIONNAIRE”
Disclaimer for Complete Material Utilization
The displayed research work titled "Effects of Non-audit Services on Audit" is stated as a research guideline towards accomplishing your assigned project / seminar research work. All the research materials on this website are ONLY for research purposes and should be used as a guideline in developing your research work. For no reason should you copy word for word as projectlist.com.ng will not be liable for any who copied the material. By ordering the complete research guideline, it signifies that you've accepted our terms of service.
Frequently Asked Questions (FAQ)
Can this topic “Impact of ICT on Office Manager’s Work Performance in Selected Public Service Sector” be used for Office Technology and Management (OTM) Project?
Yes it can be utilized for research — The topic of this study is the impact of information and communication technology (ICT) on office manager's job performance. The instrument used in gathering data for this is the questionnaire. The scope of the study covered four selected public service sectors in Owerri. Population was 57 and sample technique was 50. The data gathered were analyzed using frequency mean calculations and table presentations. The research findings reveal that information and communication technology motivate the job performance of office manager's and makes work easier and faster. Again, that lack of maintenance will reduce the effectiveness of these machines and bring slow down in processing. From the summary of the findings, the researcher therefore concludes that information and communication technology should be …
Can the material for “Development of Price Determining System for Shop Wares” be used as a guide for Computer Science (CS) Project?
Yes it can be used — Computerized Price determining system is a system that uses computers to input, process, store and output accounting information in form of financial reports. The aim of the study is to Design and Implement of a Computerized Price Determining System for Shop Wares using Roban Stores as a case study. In achieving this aim, the following objectives were laid out to design and implement an application software that will eliminate the above problems such as misplacement of vital information, documents, records, duplication of efforts etc, and a lot of time is wasted or taking when locating and processing of vital files, reduce the duplication efforts due to in-accuracy in activities and time taken in locating of files when it is required …
Can the material for “Evaluation of the Effect of Manpower Training and Development in Service Organization” be used as a guide for Public Administration (PA) Project?
Yes it can be used — Most service organization in Nigeria, in recent years are facing the challenges of labour turn over due to lack of job training of their employees. More so, most service organization keep downsizing their employees and recruiting new ones as a result of changes in their services and work processes driven by technological trends and competitive environment. Therefore, it is logical for employees to keep changing their methodologies, thus giving room for continuous training and development. The objective of this study was to examine whether employees’ training and development enhances work efficiency in the service organization and aimed at finding out the adequacy of training and development programme provided to the staff of Power Holding Company of Nigeria (PHCN) in Zaria. …
Can the material for “The Impact of Accessibility on Residential Property Values” be used as a guide for Estate Management (EM) Project?
Yes it can be used — Several studies have postulated that the accessibility of a location affect the values of properties in that location. However, this research has drawn attention to the disposition of the Estate Surveyors and Valuers, Real estate developers and also investors with regard to factors of accessibility and how they enhance the value of properties. Therefore, this study has shown that accessibility has significant impact on residential property value in New Haven Layout, Enugu and its environment. It has enlightened the tenants on the important of living in an area with good infrastructural facilities. …
Is the topic “The Effect of Foreign Aids on National Development” recommended for Public Administration (PA) Project?
Yes it is highly recommended — This study is concerned with the effects of foreign aids on national development. (a case study of foreign health aids to nigeria from (1999-2003). The topic attempt to examine the effect of health aids in nigeria economy from 1999-2003. The world health organization is a specialized agency of the united nations (un) that acts as the coordinating authority on international public health. They also control outbreak of infections, diseases, influenza hiv/aids. They also sponsor programmes to prevent and treat such diseases. Questionnaire were distributed among the staff of world health organization (who) at yusur nations street off yakubu gowon way asokoro, abuja in finding out what they think about health aids received by nigeria from developed countries using table of …
Can the material for “Effect of Staff Training on Job Satisfaction” be used as a guide for Public Administration (PA) Project?
Yes it can be used — Despite various training courses attended by staff of Kogi State Judiciary, there has been low morale and no job satisfaction. The major objective of this research was to determine the effect of training on job satisfaction in Kogi State Judicial Service for the period of 2003 to 2012. Specifically, the study sought to find out the extent to which attendance of short/long term course/programmes, and acquisition of higher educational qualifications (Degrees/Diplomas) has affected job satisfaction of staff of Kogi State Judicial Service. The research hypothesized that “that short or long term training courses and acquisition of higher educational qualifications does not affect staff job satisfaction”. The expectancy theory of Vroom (1964) was adopted for this research. The Survey research design with …
Can the material for “Impact of Motivation of the Performance of Biology Teacher in Secondary Schools” be used as a guide for Education Project?
Yes it can be used — Biology Teacher's performance refers to what teachers achieve in their studies and how they cope with or accomplish different teaching experiences given to them by their employer. The most difficult problems educators face in contemporary Nigeria is lack of interest from their students. The aim of the study is to investigate the Impact of Motivation of the Performance of Biology Teacher in Secondary Schools in Nigeria. In achieving this aim, the following specific objectives were laid out to investigate whether or not motivations have positive impact on the performance of Senior Secondary School students’ in Biology, identify the various motivational aspects that encourages students to perform very well in Biology, determine the extent of motivational efforts put by teachers in …
Can the material for “An Evaluation on the Opinions of Biology Students on Issues with Safety and Management in Laboratories” be used as a guide for Education Project?
Yes it can be used — Biology laboratory Management is responsible for providing advice and information to scientists on health and safety, particularly on how to carry out risk assessments and on appropriate control measures during biology practical. The study was carried out to evaluate the Opinions of Biology Students on Issues with Safety and Management in Laboratories. In achieving this aim, the following specific objectives were laid out to ascertain the effect of poor management of laboratory equipment on student performance in biology, examine if there is biology laboratory in secondary schools and ascertain the role of student in the management of laboratory equipment;. The research design used in this report is descriptive design, utilizing questionnaire method to obtain information from the respondents for this …
Can the material for “The Impact of Environment on English Performance of Students” be used as a guide for Education Project?
Yes it can be used — The study explores the Impact of Environment on English Performance of Students in Warri-south Local Government Area in Delta State. In achieving this aim, the following specific objectives were laid out to examine the environmental factors affect students’ performance in English, its prospects and problems faced by students, identify factors that affect effective teaching and learning of the English language in the secondary schools in Warri-south Local Government Area in Delta State, and examine the role English language plays towards the government as it is being used for the purpose of government and administration, as documentation of government records; administrative instruction and minutes, legislation; court records and proceedings. The research design used in this report is descriptive design, utilizing questionnaire …
Can the material for “Analysis of the Impact of Parks and Open Spaces on Residential Property Values” be used as a guide for Estate Management (EM) Project?
Yes it can be used — This research work emphasized on the analysis of the impact of parks and open spaces on residential property values in Independence Layout. The focus of this study was to analyze the impact of pack and open spaces on residential property values. This research embodies the benefits of parks and open spaces and also the implication of parks and open spaces. To achieve this aim, the researcher employed surveyor research method. Some information and findings were made; these findings are statistically analyzed and resulting in some conclusions and recommendations. …