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Explaining Audit Market Structure and Reforms – Audit Independence and Provision of Non-audit Services (Part 3 of 3)

Business diversification makes good sense to provide a one-stop-shop for the client, and may possibly reduce cost through economies of scope. Furthermore, while audit revenue grows slowly, revenue from these non-audit services (NAS) grows rapidly to become significant contribution. However, the increasing contribution of NAS to the revenue mix inevitably raises the question: Is the auditor’s independence threatened when the incumbent audit firm takes on NAS for the client?
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