An Examination of Changes in Scope of Services Performed by

The provision of nonaudit services has economic consequences that may affect the auditor-client relationship. Changes in the aggregate supply of management advisory services (MAS), tax services, and total nonaudit services by public accountants during the years 1982-1988 are examined. In addition, changes in the purchases of MAS by publicly held clients of these CPA firms are investigated. Data reported to the Securities & Exchange Commission (SEC) Practice Section of the AICPA Division for CPA Firms by member firms are utilized. In general, the results indicate that the major US accounting firms have become slightly less dependent on revenue from audit services during the 1980s. The results also reveal that, without exception, nonaudit services have become a less important component of revenues in the SEC client market. No significant changes in purchases of MAS by SEC clients during the period of the study are noted. Those SEC clients that did acquire MAS from their auditor purchased relatively small amounts.