Analysis of Audit Fees for Nonprofits

Abstract

In contrast to the extensive research on audit fees of for-profit companies, literature on nonprofit audit fees is limited. In this article, audit fee determinants are tested using a Belgian sample of nonprofits. We find that Big4 auditors charge fee premiums, and that nonprofit expert auditors charge lower fees when expertise is measured at audit partner level (as opposed to audit firm level). These findings hold after controlling for self-selection by using propensity score matching. We also address the resource dependence and agency characteristics of nonprofit audit clients and find that both are relevant in explaining audit pricing.