비감사서비스 및 계속감사기간이 감사품질에 미치는 영향 : 회계오류의 발생을 중심으로

Abstract

This study examines the effect of non-audit service and audit tenure on the audit quality. Current literatures investigating the relationship between audit tenure and non-audit service do not show an consistent outcome. This study conducted the research asking the similar question, using the accounting error which has been used widely as a proxy for audit quality. This study is different from other studies from many perspectives. First, prior studies have used the discretionary accruals, which has a measurement problem. Second, this study incorporated jointly both audit tenure and non-audit service. Current literature examines the effect of audit tenure and non-audit service separately. Since these two phenomena are not mutually exclusive, we need to combine the joint effect of these two factors. This study analyzed 402 non financial, Dec-31 fiscal year-end firms listed on Korean Stock Exchange during the 2001 and 2007 period. Accounting error was found in the footnote to the financial statement and the non-audit service was found in the annual report. Empirical evidence indicates that non-audit service and audit tenure, if analyzed separately, affect audit quality negatively. Rather, it shows that non-audit service and audit tenure improve audit quality. However, the joint effect of these two variables shows the following results. Non-audit service under the short audit tenure improves audit quality, while non-audit service under the long audit tenure negatively affects audit quality. This empirical evidence shows that non audit service and audit tenure have both complimentary and at the same time conflicting effect each other. Also, the impairment of the independence and the accumulation of expertise affect the audit quality differently depending on the combination of non-audit service and audit tenure. First of all, in case that the auditor is in lack of expertise due to the short audit experience, auditors can obtain the knowledge of the auditee in conducting the non-audit service. On the other hand, when they do not offer the non-audit service, auditors can acquire the knowledge if they are involved in the audit for a long time period. Therefore, non-audit service and long audit tenure complimentarily help to achieve the audit quality by gaining the expertise. However, in the early stage of audit it is difficult to perform a quality audit unless the auditor is engaged in the non-audit service. Also, auditor's independence is likely to be impaired when they are engaged in the non-audit service and at the same time, in the long audit tenure. Therefore, we can interpret the outcome of the study as the complimentary interaction of non-audit service and audit tenure causes the audit quality to deteriorate. This study provides insightful intuition to the researchers and also carries policy implication. Recently, there has been a change in the non-audit service. IFAC revised its Ethics rule and we are going to adopt it as it's translated. Since the accounting principle is globalized, we have to determine whether we have to adopt all the ethics rule by IFAC, or we enforce our own regulation Even though the mandatory auditor rotation has been discontinued, the regulatory agency should pay attention to whether the change in the regulation aggravates the audit quality.