Provision of Non-Audit Services, Audit Fees and Their Impact on Auditor Independence

Abstract

Auditor independence remains a cornerstone of financial market integrity, especially as companies increasingly engage their auditors for non-audit services (NAS). This issue is critical because excessive reliance on NAS can undermine auditor objectivity, erode investor confidence, and ultimately threaten the credibility of financial reporting. This study analyses recent audit and NAS fee disclosures from leading companies across global, Pakistani, and UAE markets. The key findings reveal that, despite improvements in transparency, high NAS fee ratios persist in several sectors and regions, most notably among conglomerates, banking, and telecommunications. The data demonstrate that full disclosure alone is insufficient to safeguard auditor independence when significant economic incentives are at play. These results underscore the urgent need for enforceable regulatory caps and proactive governance to protect the integrity of the audit function. Employing a region- and sector-specific analysis, this research explores the evolving relationship between the provision of non-audit services, audit fees, and auditor independence. The findings indicate that while transparency in fee reporting has improved, high NAS ratios continue to pose significant risks to the independence of external auditors. The study concludes with practical recommendations for regulators and boards, emphasizing the necessity of strict caps on NAS, standardized disclosures, and strengthened audit committee oversight to ensure the credibility and objectivity of the audit process.