The title of my dissertation is `Provision of non-audit services by auditors: A theoretical and empirical analysis in a corporate governance context.` I am doing a corporate governance Masters degree and the dissertation is whether audit and non-audit se

Provision of non-audit services by auditors : A theoretical and empirical analysis in a corporate governance context

A Dissertation

CHAPTER 1

INTRODUCTION

Background

Experian reports that the the incidence of organizational insolvencies has gone up by 11 in 2005 . This has been accounted for by bankrupcies of companies which have bot been able to cope up with the dynamism of the business playing arena in the United Kingdom . Organisations have explained that this was caused by a gradual decrease in the spending of customers , increased energy expense and bureacracy . Specifically

, the company asserts that there have been over eighteen thousand such losses in that year , which has been a record high since 3 years ago . The players which were most badly hit were those from non-food reatil business services and media . Moreover , it projects that these numbers will increase all the more in the immediate future , probably within the next two years (online , BBC

It is widely acknowledged that changes in the demands of customers may have a very strong impact in the earnings of an organization , and yet this is nothing compared to the impact of accounting controversies within such firms . The management of these organizations are being blamed for the bankruptcy of the companies under their management helm One other repercussion of such is the massive reengineering of the organization which usually follows . A concrete example is Enron (Dewing Russell , 2003

In the latter part of the ninety 's and two thousand , this particular company had a leverage in the trading floor . The organzation has began a gas company and ultimately was able to broaden its reach to other sectors . There has been a period where the company seemed to have prospered in every business venture it has delved into . The organization has been successful at getting the right people on the bus , initially those sourced from the energy industry and others who came from Wall Street . However , these human resource assets were futile in preventing the eventual demise of the Enron phenomenon (Dewing Russell , 2003

The well documented controversial scandal relayed the specific details that had to do with how accounting has been manipulated by Enron to its advantage . In effect , from a status of being among the cream of the crop among American industries , it became a menace and an epitome of dishonesty . It became an example of what not to do to ensure that one complies with ethics and corporate social responsibility standards There were numerous individuals who were hard hit by Enron 's downfall Because of bankruptcy , there were a lot of employees who needed to be terminated involuntarily and with little separation pay . The organization has convinced its former employees to allot their pension assets towards firm stock , and these people have lost substantial amounts in the form of pension , as well as long term employment . Thus after thorough investigation , its top managers Skilling and Lay have been found guilty on cases of conspiracy and fraud (Dewing Russell 2003

With this much talked about...