The impact of non-audit-services on audit quality

Abstract: This paper investigates non-audit services (NAS) impact on audit quality, a topic that has garnered significant attention due to concerns about auditors' ability to maintain independence. The increasing prevalence of NAS, coupled with a series of accounting scandals, has intensified stakeholder concerns, yet the true effect of NAS on audit quality remains ambiguous. This is especially true in a Swedish private setting, where few studies within this field have been conducted and the specific regulatory environment creates reason to believe that audit-independence risks being jeopardized. For those reasons, this study employs logistic regression analysis to assess the association between NAS fees and the audit opinion to examine if the provision of NAS impairs audit quality in large Swedish private firms. The results of this study show no evidence for NAS to impair audit quality in terms of audit independence. Furthermore, the study finds no conclusive evidence that audit quality varies with the size of the audit firm. Ultimately, the study is able to strengthen regulators', as well as other stakeholders', trust in issued audit opinions and hence the accuracy of audits performed on Swedish private firms.