Research shows that investors react as though they perceive auditor independence as impaired when auditors receive non-audit service revenue from their audit clients even if actual auditor independence is not affected.

Question

Quizplus · Accepted Answer

This statement is true. Studies have found that investors view non-audit service fees paid to auditors by their audit clients as a potential threat to auditor independence, even when there is no actual impairment of independence. This perception can lead to reduced confidence in the audit and financial reporting process. As a result, many companies now limit the amount of non-audit services that can be provided to audit clients to help mitigate potential conflicts of interest.

Research Shows That Investors React as Though They Perceive Auditor