Internal Auditing Outsourcing, Nonaudit Services and Audit Fees
Access Status
Open access
Authors
Abdul Wahab, Effiezal
Gist, Willie E
Gul, Ferdinand A
Mat Zain, Mazlina
Date
2021Type
Journal Article
Metadata
Show full item recordCitation
Abdul Wahab, E. and Gist, W.E. and Gul, F.A. and Mat Zain, M. 2021. Internal Auditing Outsourcing, Nonaudit Services and Audit Fees. Auditing: A Journal of Practice and Theory.
Source Title
Auditing: A Journal of Practice and Theory
ISSN
Faculty
Faculty of Business and Law
School
School of Accounting
Collection
Abstract
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.