The Provision of Audit and Non-Auditing Services (NAS) : The Case of U.S. Property-Casualty Insurers

Jiang CHENG, Mary A. WEISS, Tzuting LIN

Research output: Journal PublicationsJournal Article (refereed)peer-review


This research investigates the impact of using the same auditing firm to perform the audit and a specific non-auditing service (NAS), statement of actuarial opinion on loss reserves, for a sample of U.S. property-casualty insurers. The joint provision of auditing and NAS is evaluated with respect to audit quality, audit fee, and the credit rating of the insurer. The effect of the Sarbanes-Oxley Act (SOX) on the audit fee and audit quality is examined, too. The sample period is 1999 to 2010. The results indicate that healthy insurers are more over-reserved when the same auditor is used for the audit as for NAS and that both weak and healthy insurers bolstered loss reserves after SOX. The audit fee is lower when the same auditing firm is used to perform the audit and statement of actuarial opinion on loss reserves. The audit fee increased after SOX for both weak and healthy publicly-traded insurers. The A. M. Best rating is positively related to the use of the same auditing firm for the audit and loss reserve statement of actuarial opinion.
Original languageEnglish
Pages (from-to)39-79
Number of pages41
JournalJournal of Insurance Issues
Issue number2
Publication statusPublished - Dec 2019

Bibliographical note

Jieng Cheng acknowledges the financial support of Lingnan University, Hong Kong Special Administrative Region, China.


  • non-audit services
  • audit fee
  • credit rating

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