Using the same provider for financial statement audit and assurance of extended external reports: choices and consequences

Independent assurance of extended external reports (EER) is one of the most significant trends in today’s global assurance profession. When companies decide to purchase third-party assurance on EER, they need to decide whether to engage their financial statement auditor or a different assurance provider. We examine factors that impact this decision, and the consequences of this decision on financial statement audit quality and cost. We find that independence concerns are associated with companies choosing different EER assurance providers from their incumbent financial statement auditors, while providers’ expertise in EER assurance and the recent trend of integrating non-financial information into the annual report promote the use of the same provider. We further find some evidence that companies with the same provider attesting to both financial statements and EER benefit from having higher financial statement audit quality without paying significantly different audit fees.