Empirical Research On The Influence Of Audit And Non-audit Service On Audit-independence

In the wake of the Enron bankruptcy, people doubled that auditor provide audit and non-audit services at the same time will impair auditor independence. American regulators have taken actions to curtail auditor provided non-audit services. These actions are based on the premises that non-audit service fees will impair auditor independence by making the auditor economically dependent on the client and that the consulting nature of non-audit services reduces the auditor's objectivity. In this study we attempt to empirically investigate the validity of these concerns by gathering systematic evidence on the association between audit and non-audit services provided by incumbent auditors and auditor independence. It's necessary whether we should separate audit services and non-audit services.Firstly, we read some literatures about audit services, non-audit services and auditor independence. And we decided to measure auditor independence as the propensity of auditors to issue going concern opinions in this paper. At the same time, we put forward the following hypothesis: audit and non-audit services provided by the auditor are not related to the propensity of auditors to issue going concern opinions; non-audit services are not related to the propensity of auditors to issue going concern opinions; travel charges are inversely related to the propensity of auditors to issue going concern opinions.In order to test the above hypothesis, we limited the accounting report data of 2005 and 2006, and get two samples. We have usable sample of 249 firms in 2005 and usable sample of 238 firms in 2006. Then, we tested our hypothesis and come to the following conclusions: audit and non-audit services provided by the auditor are not significantly related to auditor independence; non-audit services are not significantly related to auditor independence; travel charges impaired auditor independence. According to the conclusions, we provide some suggestion for the supervision of auditor independence.