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591-2236-1-PB - Journal of Research in Business, Economics...

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Journal of Research in Business, Economics and Management (JRBEM) ISSN: 2395-2210 Volume 5, Issue 2 available at 570 SCITECH Volume 5, Issue 2RESEARCH ORGANISATION January 25, 2016Journal of Research in Business, Economics and ManagementDo Provision for Non-Audit Services (NAS) Give Rise to Audit Fees 1Jeya Santhini Appannan, 2Dr. Haslida Abu Hasan, 3Nurakmar Binti Mohamad Salleh, 4Nurazwani Binti Mat Radzi 1,3,4University Tunku Abdul Rahman. 2University of Malaya, Kuala Lumpur. Abstract Throughout the years, auditing field has experienced tremendous change, but in Malaysia, the charged fees are still found to be the lowest in Asean countries. Literatures forwarded non-audit services among others as being influential to audit fees. Thus, this study aims at exploring the significant of non-audit services in charting audit fees in Malaysia. 100 public listed companies were surveyed comparing their non-audit service (NAS) they used and reasons, auditees complexity, auditees risk, auditor’s opinion, auditees size and audit fees. Findings indicated that NAS is insignificant to audit fees charged in Malaysia. Keywords:Non-Audit Service; Audit Fees; Audit Disclosure, Auditees Size, Auditees Complexity. 1.Introduction Non audit services (NAS) fees refer to fees paid to auditor for tasks beyond certification audit. Such payment is for services rendered neither to improvised financial statement, nor to the review services that are adapted in line with generally accepted auditing standards (GAAS). NAS fees may comprise payment for consultancy, tax assistance, SEC filing services, mergers and acquisitions support, and others. In general, NAS is required to improve operational transparency. It is argued that the NAS performed by auditors and its fees have been increasing significantly contributing towards audit firms‟revenue and deemed to have substantially impaired auditor independence. This statement is reflected in Dhaliwal‟s et. al.,(2008) argument that Securities and Exchange Commission (SEC) further claimed that acquiring NAS may deteriorate auditor independence. Specifically, regulators are alarmed about two effects of NAS fees; (i) auditors became financially dependent hence appear to more likely unable to stand up to management pressure for fear of losing their client; and (ii) the consulting nature of many non-audit services put auditors at managerial roles, which may risk the objectivity nature of audit itself (Defond, 2002). Due to the fact, the SEC outlines new rule that prohibit auditors from engaging in certain NAS and require audit fees to be disclosed. These concerns are summarized in the following quote from the SEC regulations mandating fee disclosures (SEC [2000]): ….an auditor's interest in establishing or preserving a non-audit services relation-ship raises two types of independence concerns. First, the more the auditor has at stake in its dealings with the audit client, the greater the cost to the auditor should he or she

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Term
Two
Professor
Stubbs
Tags
The Land, Audit fees

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