The provision on non-audit services by auditors: Let the market evolve and decide

Benito Arruñada

Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra

Abstract: The provision of non-audit services by auditors to their audit clients reduces total costs, increases technical competence and motivates more intense competition. Furthermore, these services do not necessarily damage auditor independence nor the quality of non-audit services. This assessment leads to recommending that legislative policy should aim at facilitating the development and use of the safeguards provided by the free action of market forces. Regulation should thus aim to enable the parties-audit firms, self- regulatory bodies and audit clients-to discover through competitive market interaction both the most efficient mix of services and the corresponding quality safeguards, adjusting for the costs and benefits of each possibility. Particular emphasis is placed on the role played by fee income diversification and the enhancement, through disclosure rules, of market incentives to diversify.

Keywords: Auditing; professional services; non-audit services; multidisciplinary firms (search for similar items in EconPapers)
JEL-codes: K22 K23 M40 (search for similar items in EconPapers)
Date: 1999-06
New Economics Papers: this item is included in nep-ind and nep-law
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Journal Article: The provision of non-audit services by auditors let the market evolve and decide (1999)
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Persistent link: https://EconPapers.repec.org/RePEc:upf:upfgen:423

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