The effect of non-audit services fees on audit pricing - The case of banking industry

• Main Authors: Shafie, Rohami, Che Ahmad, Ayoib, Md Ali, Azham
• Format: Conference or Workshop Item
• Language: English
• Published: 2003
• Subjects: HF5601 Accounting
• Online Access: http://repo.uum.edu.my/11796/1/Rohami%20Shafie2.pdf; http://repo.uum.edu.my/11796/; http://www.mfa.com.my/events/annual-conference/

The issue of audit fees and non-audit fees charged by the audit firms has been discussed regularly in accounting and auditing literature.Recently, due of the corporate scandals in United States, the issue is discussed together with a host of revelations about audit failures that led to companies' demise.Auditing profession is being badly blamed and some suggest this could be due to the audit firm's reliance more on non audit services than the audit itself.Therefore, this study attempts to probe the situation in Malaysia using banking sector as the subject of interest.Specifically, it tries to examine the impact of non-audit services conducted by audit services conducted by audit firms to these banks on audit fees.The result showed that the variable of non-audit fees is statistically significant in determining audit fees in as predicted.This result is important since previous studies either did not find significant relationship between audit fee and non audit services fee or that the relationship is contrary to the theory.Further sensitivity analysis showed that the results are robust to different measurements and company size.