Work

Internal Auditing Outsourcing, Nonaudit Services, and Audit Fees

Year: 2021

Type: article

Abstract: SUMMARY This study examines the relationship between outsourced internal audits, nonaudit services, and audit fees. We use Malaysian data to show that client firms that outsource their internal auditing function (IAF) are associated with lower external audit fees than those with in-house IAF. Moreover, this negative relationship is significantly stronger for firms that purchase greater amounts of nonaudit services (NAS) from the auditor. The results suggest that an auditor who provides NAS to a client and thus earns additional overall revenue is willing to accept lower audit fees provided a high audit quality can be achieved through reliance on outsourced IAF. JEL Classifications: M42.

Source: Auditing A Journal of Practice & Theory

DOI: 10.2308/ajpt-17-044

Authors: Effiezal Aswadi Abdul Wahab, Willie. E. Gist, Ferdinand A. Gul, Mazlina Mat Zain

Institutions: Curtin University, Ohio University, Deakin University, Multimedia University

Language: English

Topic: Auditing, Earnings Management, Governance

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

Open Access status: green

OpenAlex ID: W3119617816

FWCI: 3.181

Cites: 61

Cited by: 11

Related to: 10