Internal Auditing Outsourcing, Nonaudit Services and Audit Fees
This study examines the relationship between outsourced internal audits, nonaudit services and audit fees. We use Malaysian data to show that client firms that outsource their internal auditing function (IAF) are associated with lower external audit fees than those with in-house IAF. Moreover, th...
| Main Authors: | , , , |
|---|---|
| Format: | Journal Article |
| Published: |
American Accounting Association
2021
|
| Subjects: | |
| Online Access: | http://hdl.handle.net/20.500.11937/82350 |
| Summary: | This study examines the relationship between outsourced internal audits, nonaudit services
and audit fees. We use Malaysian data to show that client firms that outsource their internal
auditing function (IAF) are associated with lower external audit fees than those with in-house
IAF. Moreover, this negative relationship is significantly stronger for firms that purchase
greater amounts of nonaudit services (NAS) from the auditor. The results suggest that an
auditor who provides NAS to a client and thus earns additional overall revenue is willing to
accept lower audit fees provided a high audit quality can be achieved through reliance on
outsourced IAFs. |
|---|