Revision och rådgivning: Efterfrågan, kvalitet och oberoende
2008 (Swedish)Doctoral thesis, monograph (Other academic)
Auditing is common in many organizations and a legal requirement for all limited liability companies in Sweden (ABL 9:1). In directives from the government it is clearly stated that small firms will be exempted from the statutory audit requirement. In light of this forthcoming change in regulations, this thesis is used to analyze which factors are associated with a demand for auditing. Analysis in this thesis is based on a national survey including 900 Small and Medium-sized Enterprises (SMEs). Around 2/3 of respondent’s (CEO or CFO) state that the firm will choose to have audited accounts even in the absence of such a legal requirement. Based on responses from 421 firms, logistic regression results indicated that firms purchasing advisory services from an audit firm will choose to have their accounts audited to a higher extent than those firms not receiving advisory services. This finding, not identified in prior studies, is linked to advisory services being of higher quality when the audit firm also performs audit work. The demand for auditing is further positively associated with firm size, use of a Big 4 audit firm and firms located in the county of Småland. From these findings it follows that the traditional view of auditing as merely a control mechanism needs to be complemented by consideration of aspects of the internal value of auditing.
The approaches of SME’s when engaging an audit firm for different types of advisory services is examined in this study based upon survey data. It is shown that the majority of advisory services provided are related to core competencies of an auditor such as tax, accounting and law. Logistic regression results show a positive association between firms purchasing advisory services and the length of the relationship with the provider as well as with the respondent’s perception of the audit quality. The latter association further confirms the close connection between audit and advisory services. It should be noted that when an audit firm recommends advisory services their use is significantly higher. There is also support for the demand for advisory services being positively related to firms that are corporate subsidiaries and located in Småland and Norrland, but negatively associated with the respondent’s level of education. It follows that factors related to demand for advisory services on an aggregate level could be categorized as being dependent on firm characteristics, audit firm characteristics and the relationship between the parties.
Provision of non-audit services (NAS), such as different types of advisory services, to audit clients and the potential consequences for auditor independence and audit quality have been discussed in public debates and research as well as being subject of regulation. OLS regression results show that reporting quality is higher when the audit firm provides advisory services as well as preparing accounts. These findings hold for both discretionary accruals and a respondent’s perception of reporting quality. The provision of NAS improves the reporting quality due to better knowledge of the client and its operations. From the perspective of reporting quality this finding implies that there is no necessity to further restrict the possibility for an audit firm to provide advisory services as well as preparing accounts for audit clients.
Place, publisher, year, edition, pages
Umeå: Umeå universitet , 2008. , 292 p.
Studier i företagsekonomi. Serie B, ISSN 0346-8291 ; 64
auditing, advisory services, non audit services, audit quality, auditor independence, SME
revisionskvalitet, revisorns oberoende, små och medelstora företag, revision, rådgivning, efterfrågan på revision, efterfrågan på rådgivning
IdentifiersURN: urn:nbn:se:umu:diva-1664ISBN: 978-91-7264-583-7OAI: oai:DiVA.org:umu-1664DiVA: diva2:141745
2008-06-13, S 205, Samhällsvetarhuset, Umeå universitet, Umeå, 13:15
Eilifsen, Aasmund, Professor
Sundgren, Stefan, ProfessorBoter, Håkan, Professor