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The effects of the provision of consulting services on audit reporting quality

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  • Michael Willoughby
  • Pedro Carmona
  • Alexandre Momparler

Abstract

The growing complexity of the global business environment is leading innovative firms to demand further external counselling to better handle rapid change and increasing uncertainty. Likewise, the implementation of new information systems is usually carried out with the help of external advisors. This paper examines whether the provision of consulting services undermines audit reporting quality by testing for an association between advisory services and audit reporting. A cross-sectional logistic regression is estimated to test the relationship between consulting fees and the audit outcome. The evidence suggests that there is no statistically significant association between non-audit fees and audit outcome. This finding is consistent with the idea that audit reporting quality is not impaired by the provision of consulting services.

Suggested Citation

  • Michael Willoughby & Pedro Carmona & Alexandre Momparler, 2011. "The effects of the provision of consulting services on audit reporting quality," The Service Industries Journal, Taylor & Francis Journals, vol. 32(3), pages 411-429, February.
    • Handle: RePEc:taf:servic:v:32:y:2011:i:3:p:411-429
    DOI: 10.1080/02642069.2011.567415
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    1. Lo, Andrew W., 1986. "Logit versus discriminant analysis : A specification test and application to corporate bankruptcies," Journal of Econometrics, Elsevier, vol. 31(2), pages 151-178, March.
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