비감사서비스가 회계이익과 과세소득의 일시적 차이에 미치는 영향

Abstract

The adoption of International Financial Reporting Standards(IFRS) cause various practical issues on recent accounting atmosphere. As one of important issues, IFRS introduction advisory service could be controversial in auditor independence perspective. IFRS introduction advisory service became lucrative revenue source for audit firms due to relatively big amount of payment, leading audit market to be severely competitive. IFRS introduction advisory service, however, has two contradictory aspects in auditor independence view. On one hand, IFRS introduction advisory service could enhance auditor expertise because it enables auditors to understand audited company more thoroughly. On the other hand, however, IFRS introduction advisory service could impair auditor independence due to economic dependence on audited company. This paper examines whether auditors can affect the book-tax temporary difference(a proxy for earnings management) of audited companies if non-audit service was concurrently provided with audit service to audited companies. Specifically, this paper examines whether IFRS introduction advisory service can affect the temporary difference(earnings management) of audited company. The study sample is composed of 773 firms with both audit service and non-audit service, listed on the Korea Stock Exchange(KSE) and Korean Securities Dealers Automated Quotations(KOSDAQ) in 2007 and 2008. Of those samples, 59 companies are classified as those that have received IFRS introduction advisory services from their auditors while 714 companies are classified as those that have not. This study uses four regression models to examine the associations between four aspects of non-audit services and the book-tax difference. These four non-audit services include the natural logarithm of total non-audit fees (NAF), the natural logarithm of fees paid for tax consulting (TAX), the natural logarithm of fees paid for international financial reporting standards (IFRS), and the natural logarithm of other fees than the fees mentioned above (OTHERS). Consistent with prior studies, control variables include cash flows from operating activities scaled by total assets (CFO), the natural logarithm of total assets (SIZE), leverage ratio defined as the proportion of total liability to total assets (LEV), an indicator representing a Big 4 auditor (BIG4), the ownership by primary owners (OWN), the ownership by foreign investors (FOR), a firm growth measured as asset growth (GROW), and a measure of capital intensity (CAPINT). As additional analyses, this study also examine the associations between non-audit services and the direction of earnings management by separating the sample in terms of positive and negative effects on earnings. According to the result of examination, level of non-service fee and the ratio of non service fee occupying in the revenue from audited company can't effect on temporary difference(earnings management) of audited company. In addition to, tax consulting service fee which is kind of non-audit service can significantly have negative effect on temporary difference(earnings management) of audited company and IFRS introduction advisory service can significantly have positive effect on temporary difference(earnings management) of audited company. Because of close relation with auditing, the result of tax consulting service is interpreted that tax consulting service increases specialty of auditor rather than impairs the independence of auditor. However, the result of IFRS introduction advisory service is interpreted that IFRS introduction advisory service impair the independence of auditor to effect on temporary difference(earnings management) of audited company because IFRS introduction service which is the major revenue source of accounting firm. This paper contributes two things compared to prior studies. To begin with, we examine IFRS introduction advisory service independently from non-audit services. Prior studies mainly classify non-audit services into tax consulting service and other service. By separating IFRS introduction advisory service from other non-audit service, the results could provide policy makers with insights whether IFRS introduction service could be concurrently provided with audit service or not. In addition, we use the temporal book-tax difference as an earnings management measure. Most of prior studies use discretionary accruals as a measure of auditor independence. However, as we know, the measurement error problem of discretionary accruals has been stated in many prior studies. Compared to discretionary accruals, book-tax difference is relatively free from measurement error. The rationale for book-tax differences comes from the less lenient regulations of tax codes in Korea compared to financial accounting principles. If firms manage the book income upwards without affecting the taxable income, such management would be reflected in the tax footnotes of financial statements. Taxable income could serve as a benchmark for the quality of book income which can be managed more easily. Temporal book-tax differences are measured as discretionary components of book and taxable income. In summary, the results of this paper suggest that regulatory bodies need to revisit the current regulations on the restriction of non-audit services. Some of the restricted non-audit services may not lower the quality of earnings while some of the permitted non-audit services have a negative effect of earnings quality without proper safeguards. In order to maintain the independence of auditors, detailed practical guidelines for safeguards can be considered. With the introduction of International Financial Reporting Standards (IFRS), we expect the auditing industry in Korea will experience a dramatic change pertaining to non-audit services. This is because of the change in primary financial statements from individual to consolidated statements. With the consolidated financial statements, auditors of parent companies may face more complex problems in determining the conflict of interest due to the provision of non-audit services. This paper expect that the empirical results help regulatory bodies improve their understanding over whether newly enacted regulations regarding the restriction or allowance of non-audit services have achieved their initial purposes.