Using the Same Provider for Financial Statement Audit and Assurance of Extended External Reports: Choices and Consequences

When companies decide to purchase third-party assurance on Extended External Reports (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 providers’ specialization in the assurance of EER and independence concerns are significant reasons for choosing different EER assurance providers from incumbent financial statement auditors, while the recent trend of integrating non-financial information into the annual report promotes the use of the same provider. We further find that companies with the same provider attesting to both financial statements and EER benefit from having higher financial statement audit quality without paying significantly higher audit fees.