The Impact Of Provision Of Nas To Audit Clients On Auditors Independency And Audit Quality

The independence of an auditor and maintaining audit quality has not only been viewed asrnan ethical issue within the auditing professional bodies like the International Federation ofrnAccountants (IFAC), but also it is the cornerstone, which a successful audit is based. Thisrnpaper examines whether provision of non-audit service to an audit client affects auditrnindependency and quality. A questionnaire was used to collect data from fifty-threernemployees of eight private audit firms located in Addis Ababa. The responses obtained werernanalyzed using a quantitative and a qualitative approach with the help of SPSS. Thernresearcher used stratified random sampling technique, and the study had seventy-four totalrnaudit firms in the industry.rnIn relation to the impact of non-audit service on auditorrnindependency and audit quality the result shows that, the provision of NAS to audit clientsrnwas found to provide auditors with greater experience of the client‟s industry and greaterrnaccess to the client‟s accounting system. Additionally, such an arrangement was consideredrnto enhance audit quality, but simultaneously it was also believed that a separation ofrnengagement teams, which carries out NAS from audit services, was desirable since auditorsrnare perceived to have greater credibility when the demarcation is clear. The studyrnrecommended Accounting and Auditing board of Ethiopia should properly scrutinize thernwork of private audit firms concerning NAS, provide continuous trainings, and establishrnupgraded set of guideline based on the best practices

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