Auditor Performance of MAS: A Study of Its Effects on Decisions and Perceptions

For many years, the auditor's ability to perform management advisory services (MAS) and remain independent has been questioned. Although the accounting profession has argued that this is a perception issue only, critics are armed with surveys indicating that many perceive auditor independence as negatively affected when MAS are performed for audit clients. However, these early surveys are being disputed for the following reasons: 1. the questions were phrased to bias replies, and 2. the subjects could easily have been aware of the researchers' expectations. A new study used a different approach; identical loan and investment packages were presented to loan officers and financial analysts, with the MAS variable systematically manipulated across individuals. The results of this study indicate that auditor provided MAS has little, if any, effect on typical investment or credit granting decisions, on perceptions of financial statement reliability, or on perceptions of auditor independence.