Document Type
Article
Abstract
Public accounting firms have increased their scope of services during the final two decades of the 20th century. The Securities and Exchange Commission's proposed July 2000 Revision of the Commissions' Auditor Independence Requirements included scope of services as related to non-audit services provided to audit clients. This is the subject which is the focus of this paper. A survey to secure opinions related to the non-audit services identified in Revision of Independence Requirements and to company policies was designed. A letter, memorandum, and questionnaire were mailed personally to the CEOs of 470 of the Fortune 500 companies. Usable responses were received from 89 companies (19.7 percent response of 451 assumed to have reached recipients.) The responses revealed considerable range in policies and opinions. Companies appear concerned about the independence of their audit firms and the topic was discussed with their audit committees. There were five of the 10 services identified for which more than 50 percent of the respondents indicated that independence would be impaired if the audit firm provided the service. These were: bookkeeping and related services; appraisal or valuation services; management functions; broker-dealer, investment adviser, or investment banking; and legal services. The other five services listed, for which more than 50 percent of the respondents checked that independence would not be impaired, were: financial information systems design implementation; actuarial services; internal audit outsourcing; human resources; and expert services. The final rules were issued in late 2000. The judgments of the SEC and of the respondents in this survey, which was completed prior to the final rules, were similar in relation to a number of the services. A brief postscript discusses the similarities
Recommended Citation
Oliverio, Mary Ellen and Newman, Bernard H., "Use of Audit Firm for Non-audit Services: Is Independence Impaired?" (2002). Faculty Working Papers. 25.
https://digitalcommons.pace.edu/lubinfaculty_workingpapers/25
Comments
This paper was published as a Faculty Working Paper (no.204)for the Lubin School of Business, Center for Applied Research, [no date]. Original date of publication is not available.