AUDITOR INDEPENDENCE, AUDIT QUALIFICATIONS AND THE PROVISION OF NON‐AUDIT SERVICES: A NOTE

Abstract: This paper presents the results of a study designed to investigate the question of whether there is the potential for an appearance of auditor independence impairment when higher levels of non‐audit services are provided to audit clients. This question was investigated by analysing the audit reports for a sample of publicly listed companies over the period 1980 to 1989. The results of the analysis indicate that the auditors of companies not receiving an audit qualification of any type over the period derived a significantly higher proportion of their remuneration from non‐audit services fees than the auditors of companies receiving at least one audit qualification. This result is driven by the non‐Top 100 companies in the research sample. These findings could suggest that auditors are less likely to qualify a given company's financial statements when higher levels of non‐audit services fees are derived. This could convey the view that the independence of the auditors of these companies may have been compromised.