The Cost of Auditing Service Performance Information

This paper adds to prior literature by examining whether requiring the assurance of non-financial information increases audit fees. Specifically, we use a sample of New Zealand not-for-profits (charities) newly required to prepare statements of service performance (SSP), following accounting standards and assured per auditing standards. We find evidence of a significant increase in audit fees, although there is no change in audit or filing lag. There is some evidence that adopting the New Zealand-specific auditing standard for SSPs can reduce the increase in audit fees for smaller not-for-profits. Overall, our results suggest mandating non-financial information should be viewed as having increased costs. These results are particularly salient considering the ever-increasing push for non-financial and sustainability information throughout the world.