Internal Auditing Outsourcing, Nonaudit Services, and Audit Fees

SUMMARY This study examines the relationship between outsourced internal audits, nonaudit services, and audit fees. We use Malaysian data to show that client firms outsource their auditing function (IAF) are associated with lower external fees than those in-house IAF. Moreover, this negative is significantly stronger for purchase greater amounts of services (NAS) from auditor. The results suggest an auditor who provides NAS a thus earns additional overall revenue willing accept provided high quality can be achieved through reliance on JEL Classifications: M42.