회계이익과 과세소득의 차이와 발생액 정보가 감사시간과 감사보수에 미치는 영향

Recent academic studies investigates book-tax differences as an indicator of earnings management(Joos et al. 2000; Philips et al. 2003; Hanlon 2005; Hanlon and Krishnan 2005 etc). Tax accounting texts claim that the differences between pre-tax financial reporting earnings and taxable income (i.e., book-tax differences) can provide information about current earnings, and the large differences between book and taxable incomes should have been an indicator of low-quality financial reporting earnings. The underlying maintained hypothesis is that because less discretion is allowed in the computation of taxable income, book-tax differences can informative about management discretion in the accruals process. The prior literature on book-tax differences provides evidence consistent with the differences providing information about quality of earnings. Though recent research reports that earnings management incentives and lower earnings response coefficients are associated with booktax differences (i.e., Hanlon 2005), there is no direct evidence that large book-tax differences reflecting information that auditors use to assess quality of earnings. This paper examines whether auditor utilize the information in book-tax differences. Specifically, we investigate whether book-tax differences are associated with higher audit hours and audit fees. Prior financial accounting research reports evidence consistent with accrual earnings being more relevant in reflecting firm performance as compared to cash flows (Dechow 1994; Dechow et al. 1998). We also investigate whether audit hours and audit fees are associated with discretionary accruals. Using our measure of total book-tax differences and discretionary accruals allows us to examine auditors’ use of all this information collectively. We measure book-tax differences as the absolute value of both total book-tax differences and accruals. A large or volatile book-tax differences and accruals (positive and negative) may imply a large extent of aggressiveness or frequent manipulations. We use discretionary accruals to measure the extent of firms’ earning management. We employ the model identified by Dechow, Sloan and Sweeny(1995) to estimate discretionary accruals. If auditors use the information reflected in book-tax differences in assessing quality of earnings then large book-tax differences should indicate the necessity for auditors to exert more audit effort (more audit hours and including more specialists) which would increase the level of audit fees for these relative to firms with smaller book-tax differences, all else constant, and also similar to accruals. The sample consists of non-banking firms with a December fiscal year-end listed on the Korean Stock Market over 2000-2005. The empirical findings are summarized as follows. First, to audit hour results, the data are consistent with larger book-tax differences or discretionary accruals being associated with high audit hours and audit fees respectively. However, we find no evidence that audit hours is associated with high total accruals. Second, to audit fee results, if prior Hanlon and Krishnan(2005) differently, book-tax difference as dividing by total assets (this is scale), the data are inconsistent with book-tax difference being associated with high audit fees. However, the data are consistent with larger total accruals or discretionary accruals being associated with high audit fees. Third, abnormal book-tax differences is no associated with abnormal audit fees, but abnormal book-tax differences is positively associated with abnormal audit hours. However, the magnitude of discretionary accruals is positively associated with abnormal audit hours and fees. Finally, we find that audit pricing is premium related to higher magnitude of discretionary accruals and deferred tax expenses. Overall, we interpret this evidence as indicating that large book-tax differences or discretionary accruals reflect information that represents a higher risk of earnings management which increases auditor’s efforts and time spent on the audit. We interpret this as being consistent with the book-tax differences or discretionary accruals reflecting information that auditors use to assess earnings quality. This paper make a important contributions to the accounting literature. This work contribute to several lines of existing research in earnings management and audit quality related study. As well, the findings of this study support the importance on the further detailed disclosure on the tax income.