세무와회계저널 | The Impact of Non－Audit Service on Audit Quality and Independence

The purpose of this study is to examine whether non－audit service by incumbent auditor about internal accounting control system (IACS) affects audit quality and independence and whether consulting fee ratio is related to those significantly or not. In this study, I use discretionary accruals measured by modified Jones model as proxies for audit quality and independence. My samples consist of listed companies in Korea Stock Exchange in 2007 and non－audit fees for IACS are collected from Dart system. Main empirical findings of this study are summarized as follows. First, non－audit services about IACS by auditor are not significantly related to the magnitude of discretionary accruals as audit quality. Second, I cannot find any statistically significant relation between consulting fee ratio and discretionary accruals. In conclusion, this study provides indirect evidence that non－audit service by incumbent auditor about IACS does not affect audit quality and independence. In addition, despite very high level of non－audit fees, it implies that the quality of earnings does not change significantly. The reason for this result is not clear. However, there may be conflict of effect in non－audit service. Like other non－audit services, consulting service on internal accounting control system not only could decrease discretionary accruals by improving understanding of client firms but also could increase discretionary accruals by impairment of independence.