Audit Independence Threats and Safeguards in Non Audit Service Provision

Abstract

This research investigates the complex dynamics of audit independence within the
context of non-audit service (NAS) provision, proposing a novel, multi-dimensional
framework for assessing threats and evaluating safeguards. While existing literature predominantly focuses on financial metrics and regulatory compliance, this
study introduces a behavioral and cognitive perspective, examining how auditorclient relationships evolve during NAS engagements and how these relationships
subtly influence judgment and objectivity. We employ a mixed-methods approach
combining experimental simulations with longitudinal case studies of audit firms
that have integrated NAS into their service portfolios. Our methodology uniquely
incorporates elements from behavioral economics, social network analysis, and professional identity theory to map the latent pathways through which independence
may be compromised, moving beyond the overt financial dependencies typically
scrutinized. The findings reveal that the most significant threats often emerge
from relational capital and cognitive alignment developed during NAS work, which
can unconsciously bias audit planning and materiality judgments. We identify a
previously under-researched ’consultancy mindset carryover’ effect, where problemsolving approaches honed in advisory roles permeate audit execution. In response,
the paper proposes and tests a set of innovative safeguards, including ’cognitive
firewalling’ protocols, mandatory perspective-taking exercises for audit teams, and
the use of algorithmic monitoring tools to detect shifts in professional judgment
patterns. The results demonstrate that structural and procedural safeguards alone
are insufficient; reinforcing the auditor’s professional identity as a protector of public interest is equally critical. This research contributes a more nuanced, humancentric model for protecting audit independence, offering practical tools for firms,
regulators, and educators to strengthen the foundational integrity of the financial
reporting ecosystem in an era of expanding professional service scope.