| Pub. Date | : Jan, 2024 |
|---|---|
| Product Name | : The IUP Journal of Accounting Research and Audit Practices |
| Product Type | : Article |
| Product Code | : IJARAP060124 |
| Author Name | : Reshma Kumari Tiwari, Niva Kalita and Santi Gopal Maji |
| Availability | : YES |
| Subject/Domain | : Finance |
| Download Format | : PDF Format |
| No. of Pages | : 18 |
There exists a lacuna in nonaudit services (NAS) literature regarding its determinants. This study is an attempt to provide preliminary evidence on various drivers of NAS in the context of an emerging nation like India. It is based on secondary data of the top 50 nonfinancial firms listed on the Bombay Stock Exchange, spanning the period 2017-2021. NAS is measured by natural log of NAS (LnNAS) and NAS fee ratio (FEERATIO), calculated as NAF divided by the sum of audit fee and nonaudit fee (NAF). The study uses Random Effects Model to identify the determinants of NAS. To check the robustness of the results, the study further employs generalized estimating equation (GEE) model. The findings bring to light growth, liquidity, audit committee effectiveness, brand name of auditor, audit tenure and audit fees as intrinsic factors influencing the NAS purchase decisions of a firm. Interestingly, the study does not find any significant influence of firm size and board size on both the employed measures of NAS.
Since the nineteenth century, when the work of external auditors surfaced, a variety of services have been rendered by the auditors, apart from performing their primary tasks (Arrunada, 1999). These complementary services are widely known as nonaudit services (NAS). Over time, NAS have accounted for a colossal chunk of the total fee paid to auditors (DeFuentes and Porcuna, 2016). NAS connote client-specific, need-based, independent, discretionary services provided to audit clients (Ratzinger-Sakel and Schonberger, 2018). The Sarbanes-Oxley Act (SOX), 2002 defines NAS as any professional services given by a qualified public accountant during the course of an audit engagement that are unrelated to an audit or review of the financial statements of an organization.