Non-Audit Services for Audit Engagement

Non-audit services refer to the services, such as appraisal or valuation services, legal services, or financial information systems design and implementation, performed by auditors that potential will impair auditors’ independence. Under the current auditing rules issued by PCAOB, most of the non-audit services are prohibited, and those permissible non-audit services must be preapproved by audit committee. Recently, a lot of big audit firms arguing that non-audit services, especially consulting services, are good for audit. Even though audit firms often argue that providing non-audit services leads to information efficiencies, the restriction on non-audit services maintains the same. In this paper, I will illustrate my preferences in terms of how non-audit services should be treated from three aspects.

First of all, I firmly support the current rules that most of the non-audit services should be prohibited because non-audit services will impair auditors’ independence, which is the most important professional standard that auditors should maintain. Among all the assurance services, audit services provide the highest level of assurance, and auditors’ reports must provide truthful and reliable information to protect investors and help its users make decisions. If an auditor’s independence is impaired, how could users know that this auditor’s report is reliable? Just because general public does not have the same amount of information as auditors do, public put a lot faith on auditors’ reports. Because of this situation, auditors should be responsible for their behavior and their reports. If those non-audit services will impair independence, then those deserve to be banned.

In addition, I think the current restriction on non-audit services is neither too strict nor not strict enough, because even though Sarbanes-Oxley Act prohibited a lot of non-audit services, it does allow some non-audit services, for instance, tax services. Since not all of the non-audit services...