Regression Model to Calculate Prices of Auditing Services of Public Tenders: Lithuanian Example

Abstract

Problem substantiation. The high price compensates audit firm for scarcity, risk or rewards for your skills. If, on the other hand, your niche is providing fast turnaround and accurate personal income tax returns, then a low price approach may be the most suitable strategy. In this case, the efficiency of your service enables you to charge a lower fee, which in turn allows firm to boost the volume of activity and earn sufficient profit from each unit. May low price approach be the most suitable strategy in public procurement procedures? The regression model shows, that factors, influencing price of public tenders are gross carrying value of the assets, employees number and planned revenue. Regression model by using significance level F<0,05 were used for the confirmation of factor importance, R Square criterion – 0,815 (>0,7) for the confirmation of the reliance of pricing factors shows whether you are on course. The paper analyses the following questions:(1)Can the current audit market pricing strategy give quality guaranty?(2)How calculate the price of public tenders?(3)How should the low pricing problem be solved?Hypotheses: Ho – May low price approach be the most suitable strategy in public procurement procedures and alternative? Resultsit can be taken affirmation by Ho, e.g. accept auditors needs maintain quality. Current audit market pricing strategy doesn’t give quality guaranty. Public tenders can be calculated of using regression model. Lowe pricing problem can’t be solved by pricing regulation, but pricing model, set by author is the way on preventing corruption in public tenders.