Tax Non-Audit Services and Client Income Tax Estimation Error

Preeti Choudhary, Allison Koester, Robert Pawlewicz

Research output: Contribution to journalArticlepeer-review

5 Scopus citations


SUMMARY: The provision of non-audit services (NAS) to audit clients can generate knowledge spillovers that enhance auditors’ judgments or self-review and self-interest threats that impair auditors’ independence. Prior research finds mixed evidence of a relation between tax NAS and clients’ (actual and potential) material GAAP violations in accounting for income taxes. As auditors are likely to avoid material GAAP violations, we re-examine this issue using a measure that reflects immaterial or within-GAAP estimation error in clients’ income tax expense. We find that greater amounts of tax NAS are associated with greater income tax estimation error, consistent with tax NAS threating auditors’ independence. The association is partially offset by auditor expertise and concentrated in engagements where auditors face both self-review and self-interest threats. Our findings inform the ongoing policy debate regarding whether accounting firms should provide tax NAS to their audit clients.

Original languageEnglish (US)
Pages (from-to)113-139
Number of pages27
Issue number2
StatePublished - May 2022
Externally publishedYes


  • audit quality
  • auditor-provided tax services
  • income tax estimation error
  • tax non-audit services

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics


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