The Impact of Provision of NAS to Audit Clients on Auditors Independency and Audit Quality
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Date
2016-01
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Addis Ababa University
Abstract
The independence of an auditor and maintaining audit quality has not only been viewed as
an ethical issue within the auditing professional bodies like the International Federation of
Accountants (IFAC), but also it is the cornerstone, which a successful audit is based. This
paper examines whether provision of non-audit service to an audit client affects audit
independency and quality. A questionnaire was used to collect data from fifty-three
employees of eight private audit firms located in Addis Ababa. The responses obtained were
analyzed using a quantitative and a qualitative approach with the help of SPSS. The
researcher used stratified random sampling technique, and the study had seventy-four total
audit firms in the industry.
In relation to the impact of non-audit service on auditor
independency and audit quality the result shows that, the provision of NAS to audit clients
was found to provide auditors with greater experience of the client‟s industry and greater
access to the client‟s accounting system. Additionally, such an arrangement was considered
to enhance audit quality, but simultaneously it was also believed that a separation of
engagement teams, which carries out NAS from audit services, was desirable since auditors
are perceived to have greater credibility when the demarcation is clear. The study
recommended Accounting and Auditing board of Ethiopia should properly scrutinize the
work of private audit firms concerning NAS, provide continuous trainings, and establish
upgraded set of guideline based on the best practices
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Keywords
Independency and audit quality