รายละเอียดบทความ
| ชื่อเรื่อง |
Does Economic Dependence Influence Auditor’s Opinions?
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| ชื่อเรื่องรอง |
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| ชื่อผู้แต่ง |
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| หัวเรื่องคำสำคัญ |
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| หัวเรื่องควบคุม |
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| คำอธิบาย / บทคัดย่อ |
Auditors are professional who have technical competence in accounting and independence in performing audit works and reporting their opinions to the public. They are expected to reduce agency cost between shareholders (principle) and management (agent). When auditors receive audit fees from their audit clients as their compensation, a question may arise whether they compromise their independence and work for management instead of shareholders. Besides, audit fee comes from the negotiation between auditors and their audit clients and there is no specific rule from the regulatory body for quoting the audit fee. Thus, the concern that audit fee or economic dependence with clients will impair auditor’s independence becomes an issue. Auditors who receive high audit fee may allow client’s management to manipulate firms’ earnings, override internal controls, and dominate audit process and opinion expression. Audit clients may ask auditors to issue unqualified or clean auditor’s opinion because the stakeholders will be unaware of any problems or unsolved issues and management can maintain their performance. On the contrary, high audit fee may represent high audit quality because it implies that auditors provide premium service to their clients such as performing systematic audit procedures, identifying weakness of internal controls, and reporting the truth to stakeholders. When audit clients have uncertainties and unsolved issue, auditors have to perform additional work until they obtain sufficient and appropriate audit evidence for expressing their opinions. Thus, they can charge for high audit fee to their audit quality and compensate with their reputation and litigation risks.
This research examines audit fees and auditor’s opinions of 1,409 listed companies in Thailand from 2004 to 2008 with an attempt to provide evidence on the impact of economic dependence on auditor’s independence. Interestingly, the research results show that firms with unqualified or clean auditor’s opinions. Modified auditor’s opinion have lower audit fee than those with modified auditor’s opinions. Modified auditor’s opinions focus on clean opinions with explanation and qualified opinions. Such evidence confirms that auditors who charge high audit fees to their clients are likely and independently to issue modified auditor’s report to clients in order to protect their reputation and avoid litigation risk. Another explanation may come from additional audit procedures imposing high audit cost and audit fees of firms with modified auditor’s opinions. Firms with uncertainties, going concern, unsolved issue, misapplication of accounting standards, limitation of audit scopes by either circumstances or management are likely to receive modified auditor’s report. Moreover, this research expects that such evidence may differ for Big 4 and non-Big4 auditors because they may have different economic bond with audit cost, reputation and litigation risks than non-Big4 auditor’s so that they should place more conservatism and do more audit works when receiving high audit fee. In contrast, non- Big 4 auditors may want to keep clients who can play high audit fee and are likely to issue clean auditor’s report to please their clients. Further investigation reveals that both of Big 4 and non-Big 4 auditors are not influenced by high audit fees in expressing their opinion. In other words, economic dependence does not impair auditor’s independence for both Big 4 and non-Big 4 auditors.
The remainder of this paper id organized as follows. Section two reviews prior literature on audit fees and audit opinion. Section three presents hypothesis development. Section four reports research design and section five provides research results. Section six concludes the paper and describes limitation of research.
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