What Is the Relationship between Audit Quality and Non-Audit Services? An Overview of the Existing Literature

Abstract

This paper takes stock of the literature that appeared on the relation between audit and non-audit services. Press, regulators and academics alike have raised concerns about how audit quality is impacted if audits are performed by firms that offer advisory and audit services. I examine the literature that has investigated impediments that regulators have imposed on audit firms to also provide advisory (non-audit services). The studies provide little support for this concern. In fact, the findings suggest that positive spill over effects occur when firms combine audit with advisory services. However unspecified levels of advisory services (not advice on tax or financial information systems) may have a negative impact on audit quality.