The Impact of Non-audit Services on Going Concern Opinions Revisited: The Case of Triennially Inspected Audit Firms


  • Ulrike Thürheimer



The validity of information contained in financial statements is an important concern for users of these statements. Validity can only be achieved through independent attestation of financial statements by auditors. Hence, auditor independence has been a concern of regulators for a long time. Specifically, the provision of non-audit services by auditors is assumed to create economic dependence of auditors on clients and therefore impairs auditor independence. This paper examines whether the provision of non-audit services by triennially inspected audit firms impairs audit quality, measured as the propensity to issue a going concern opinion (GCO) for the time period 2004 - 2006. In addition, it is examined whether the association between non-audit service fees and the propensity to issue a GCO is stronger for triennially inspected audit firms that receive a deficient inspection report from the PCAOB than for triennially inspected audit firms that receive a clean inspection report from the PCAOB. This study does not find support for either of these hypotheses. The relationship between non-audit service fees and the likelihood of issuing a GCO is insignificant for the sample of triennially inspected firms. In addition, the going concern decision by triennially inspected auditors is not influenced by the outcome of their inspection report and the association between NAS and GCO is not stronger for firms with a deficient inspection report compared to those with a clean inspection report. The study does, however, find a significantly positive relationship between the magnitude of audit fees and total fees and the likelihood of a GCO.


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