An Examination of Some Relationships Between Non-Audit Services and Auditor Change

Additional evidence is presented concerning the possible effects on the relationship of the CPA with the client of performing nonaudit services (NAS). NAS disclosures required by Accounting Series Release 250 are used to examine 2 related issues: 1. the association between the decision to change auditors and the relative level of NAS purchased from the auditor, and 2. the association between a company's decision to change auditors and changes in purchases of NAS. A matched pairs design was used to investigate empirically the relationships between auditor change and consumption of NAS. Results indicate that there were no significant differences between the level of total, recurring, or nonrecurring NAS purchased by a set of companies changing auditors and a matched set of companies that did not change auditors. However, significant differences were found in the level of NAS purchased immediately after a change in auditors. This was the case for total and recurring NAS.