This analysis reveals the variable effects of non-audit services on audit quality, suggesting insights for regulators and practitioners.
Key Points
The research aims to investigate variations in how office-level and client-level non-audit services impact audit quality depending on the audit office’s focus on non-audit services.
Analyzed existing literature on non-audit services and audit quality
Examined the relationship between office-level and client-level non-audit services
Conducted analysis of client misstatement rates in relation to non-audit services provided
Identified a nonlinear relationship between office-level non-audit services and audit quality
Found that moderate levels of non-audit services correlate with the lowest client misstatement rates
Determined that tax-related non-audit services primarily drive the observed results