The provision of other services by auditors: Independence and pricing issues

Abstract This research has three objectives: to identify the extent and level of other services provided by incumbent auditors in the Australian business environment; to examine pricing issues by investigating the relationship between fees for other services and audit fees; and to address the question of independence by (a) identifying whether the incidence of audit qualification is related to the level of other services purchased and (b) investigating whether there is a relationship between audit tenure and the level of other services provided. Information on audit fees, fees for other services, size, audit qualifications, industry and auditor (Big 8(6)/Non-Big 8(6)) was obtained from publicly available information for the majority of the top 500 Australian companies listed on the Australian stock exchange between 1986–1990. This study provides evidence that an increasing number of clients are purchasing other services from their auditor. A significant positive relationship between fees paid for other se...