Audit Fees Research Articles

Pengaruh Firm Size, Leverage, Audit Fee, Dan Audit Tenure Terhadap Opini Audit Going Concern (Studi Pada Perusahaan Perbankan Terdaftar Bursa Efek Indonesia 2018-2022)

This study aim to examine the effect of Firm size, Leverage, Audit Fee, and Audit Tenure on going concern audit opinions. This research is a quantitative study with secondary data obtained from financial statements and audit reports of banking companies listed on the Indonesia Stock Exchange from 2018 until 2022. The sample of research is 30 banking companies that was carried out using a purposive sampling method and processed with IBM SPSS version 26. The analysis technique used is multiple linear regression. The results of study indicate that Firm Size has significant effect on going concern audit opinion, Leverage and Audit Fee have no significant effect on going concern audit opinion, and Audit Tenure has significant effect on going concern audit opinion.

Non-Big 6 audit firms’ access to external resources through inter-organisational relationships

Small audit firms try to reduce their resource constraints in serving clients by creating inter-organisational relationships (IORs) through membership in accounting networks or in agreements with individual firms. Through these relationships, firms have access to audit manuals/methodology, personnel, and may perform joint audits and joint marketing of their audit services. We identify the existence of IORs from PCAOB Form 2 filings and test whether audit quality and fees vary cross-sectionally as a function of the specific resource obtained from the IOR. We find evidence that firms with access to audit technology through IORs charge higher audit fees and provide higher quality audits, in terms of smaller clients’ performance-matched discretionary accruals, higher auditors’ likelihood of issuing going concern opinions to financially distressed clients, and fewer audit deficiencies identified in PCAOB inspection reports. The findings highlight the importance of access to audit technology through IORs in improving small audit firms’ real and perceived audit quality.

The Effect of Audit Fees and Auditor Professionalism on Audit Quality with Remote Auditing as A Mediating Variable (Empirical Study of Auditors in the Province of Banten 2022-2023)

The study aims to determine the effect audit fees and auditor professionalism on audit quality with remote auditing as a mediating variable. This research method uses quantitative methods. This research uses primary data by collecting data using a questionnaire. The sample of this research are auditors who work in Public Accounting Firms Banten Province. The sample technique used in this research is Purposive Sampling method with a total sample of 50 research data. The data analysis technique for this study used multiple regression analysis with Statistical Package For the Social Sciences Software (SPSS v27) and Path Analysis with the help of an online Spbel Calculator. The result of this study prove that audit fees have a significant positive effect on audit quality, auditor professionalism has a positive effect on audit quality, remote audits have a negative effect on audit quality, audit fees have a positive effect on remote audits, and auditor professionalism has a positive effect on remote audits. Behind that, remote audits are not able to act as a mediator on the effect of audit fees on audit quality. But, remote audits is able to act as a mediator on the effect of auditor professionalism on audit quality.

Effect of Audit Fees and Audit Tenure on Earnings Management of Listed Deposit Money Banks in Nigeria

This paper assesses the effect of audit fees and audit tenure on earnings management of listed deposit money banks in Nigeria. The population consists of the 14 DMBs in Nigeria spanning from 2011 to 2021, out of which twelve banks were selected as the sample size using a criterion on the availability of data. The paper uses a longitudinal research design to investigate the effect of audit fees and audit tenure on the earnings management of listed DMBs in Nigeria. The audited financial annual reports of the banks chosen were used to collect data for the independent variables such as audit fees and audit tenure, as well as the dependent variable earnings management. The Generalized Method of Moment (GMM) was then employed for analyzing the data. The result shows that audit fee had a coefficient of -0.1461at a significant level of 0.0000. Audit tenure has positive coefficient of 0.1405at a significant level of 0.0001 influences on listed DMBs' management of earnings in Nigeria. The study therefore concludes that, audit fee curtail EM of listed DMBs in Nigeria while audit tenure do not ameliorate EM of listed DMBs in Nigeria. In order to prevent the threat of familiarity, the paper recommends that DMBs in Nigeria should stick to the statutory and professional standard audit fees and discourage long-term audit firm retention.

Audit Fee, Audit Tenure, and Audit Rotation on Audit Quality in Manufacturing Companies

Each company tries to compete to improve its performance by presenting qualify financial reports. Audit quality. Audit quality is influenced by audit fee, audit tenure and audit rotation which will be presented in the 2018 – 2022 period, for industrial companies on the Indonesian Stock Exchange. Dummy variable to test audit quality with the Big Four KAP and Non-Big Four KAP Auditor groups as a comparison. The natural logarithm (ln) of professional fees is used to measure audit fees. A dummy variable is also used to measure audit tenure, where 1 is for companies that have audit tenure of less than 3 years and 0 for companies that have audit tenure of more than 3 years, and audit rotation is tested using a dummy variable with 1 for rotation, 0 for companies which does not rotate. Purposive sampling was used to select samples with a sample size of 160 data. Logistic regression analysis as a method for testing hypotheses. From the test, the results showed that audit fees had a partial influence on audit quality, while audit frequency and audit rotation had no effect to audit quality.

Examining Audit Fee Determinants and Their Impact on Audit Quality

Examining Audit Fee Determinants and Their Impact on Audit Quality

Auditor-Firm Conflict: Theoretical Concepts Application and Analysis of the Power Dynamics Involved

This study undertakes a theoretical analysis of the auditor-firm conflict. It relied on the review of literature methodology contextualized on auditor’s appointment , firm economic pressure , management bargaining power, auditor’s fear of losing a firm, firm’s management economic power over the auditor, auditor’s personal attributes and moral reasoning, auditor’s tenure, audit fees, audit market competitiveness, non-audit services, audit firm size and the firm’s financial condition. The study relied on Goldman and Barlev model, exchange and dependency theories to explain the likely power positions in the auditor-firm relationship. Deductively the study based on the contexts indicated the presence of an asymmetry power structure where the auditor and firm have low and high power positions. The study however, proffered resolution measures such as reputational and litigation costs; strengthening of audit committees; control over auditor’s appointment and remuneration; effective discipline of firms and auditors and strong enforcement of standards. The measures can curtail the auditor’s and firm actions in reducing violation of auditing standards; improving auditor’s independence, reduce the firm’s pressure on the auditor and bring about balance of power positions. The paper has implications for understanding the auditor-firm conflict situation and provides opportunities for strengthening audit policy and audit standards development.

The Role of Ethics, Competence, Auditor Independence, and Audit Fees on Audit Quality: A Literature Review

The Role of Ethics, Competence, Auditor Independence, and Audit Fees on Audit Quality: A Literature Review

ADRs and Audit Pricing: Influence of disclosure and legal environment regime

AbstractCross‐listed firms natively operate in countries where regulations are less enforced, disclosure requirements and the legal environment are laxer than in the US. Thus, cross‐listed firms typically pay lower audit fees than US peer groups. Based on reported audit data of the cross‐listed firms in the US, this study explores how their home country's regulatory environment affects audit fees when they cross‐list on US stock exchanges. The empirical results indicate that the cross‐listed firms pay lower audit fees than their US counterparts. However, other regulatory environments in the home country, like disclosure requirements or anti‐director dictatorship, may require more audit efforts. Further, the cross‐listed firms that prepare reconciliation to US GAAP pay lower audit fees than other ADR firms that are using IFRS or US GAAP. However, still most of ADR firms pay lower audit fees than US counterpart firms.

Does client importance affect key audit matters reporting? New Zealand evidence

PurposeThis study aims to examine the relation between a client’s relative economic importance to its auditor and the number of key audit matters (KAMs) reported in the expanded audit report.Design/methodology/approachThe authors measure a client’s economic importance at the audit firm level as well as the audit partner level using the ratio of a client’s total fees to an auditor’s total fees earned from its listed clients and the ratio of a client’s audit fees to an auditor’s total audit fees from its listed clients. The authors estimate a multivariate regression model using a sample of New Zealand-listed company-years from 2017 to 2019.FindingsResults reveal a positive relation between client importance to auditor and the number of KAMs disclosed. Furthermore, the positive association between client importance and the number of KAMs reported is more pronounced for clients audited by the Big 4 auditors and less experienced audit partners. These findings suggest that auditors’ incentive to protect against potential losses from important client engagements outweighs any impairment to auditor independence and leads to a higher number of KAMs reported for the economically more important clients. Overall, the results suggest that auditors report KAMs strategically to mitigate engagement risks.Originality/valueThis study provides the first evidence on how client economic importance relates to the disclosure in the expanded audit report and contributes to the dialogue on auditors’ reporting of KAMs in the Asia-Pacific region.

Effect of The Board of Directors Size, Independence, and Frequency of Board Meetings on Audit Fees: Evidence From GCC Market

Purpose: This study aims to examine the potential impact of board size, board independence, and meeting frequency on audit fees for companies listed on the financial markets of the United Arab Emirates (UAE). Design/Methodology/Approach: The Abu Dhabi Securities Exchange (ADX) and the Dubai Financial Market (DFM) are the two financial markets in the UAE. The data utilised in the investigation were obtained from the ADX and the DFM. The data was gathered over six years, from 2011 to 2016. The final sample comprises 312 observations. The study employs descriptive and correlation tests, in addition to multiple regressions, as statistical methods. Findings: The analysis revealed a strong correlation between audit fees and both the independence and frequency of board meetings. The findings demonstrated a positive correlation between stringent corporate governance procedures and the requirement for superior audit quality, resulting in higher audit costs. The results also indicated a significant correlation between business size, profitability, leverage, and audit fees. Originality/Value: Due to the recent implementation of the corporate governance code in the UAE and its financial markets, including the ADX and DFM, the efficacy of the code remains uncertain and, therefore, subject to scrutiny. Inadequate governance and audit standards may adversely impact the integrity of financial reporting. Nevertheless, there is limited empirical research investigating the elements influencing the quality of financial reporting in the UAE. This study contributes to the existing literature by enhancing comprehension of the impact of the board of directors on audit quality, utilising data from a GCC country.

The Big 4 effect for new audit services: The case of the Danish COVID‐19 fixed‐cost business‐support scheme

This study investigates the Big 4 effect for a new‐to‐the‐world audit service. Based on unique data from the Danish COVID‐19 fixed cost support scheme we analyse differences in audit fees and two measures of audit quality across Big 4 and non‐Big 4 engagements. Our findings suggest that firms engaging with Big 4 auditors experience more successful outcomes in the application process and are willing to pay a Big 4 premium for comparable assurance services. Clients of Big 4 auditors are, on average, more likely to receive full compensation, and experience fewer rejections during the application process than clients of non‐Big 4 auditors. This research has implications for policymakers and companies.

Persistent internal control failures: Examining multiple consecutive years of disclosing material weaknesses

AbstractIn this study, we analyze a sample of accelerated filers that have reported material weaknesses (MWs) in their internal controls for multiple consecutive years. The recent emphasis by the Securities and Exchange Commission on improving accounting and controls within public companies has led to heightened scrutiny of firms with ongoing MW disclosures. Analyzing data from 2004 to 2021, we find that approximately one‐third of MW observations are for 2 or more consecutive years, with the longest duration being 12 years. Our research shows that these firms face progressively higher audit fees and longer audit report lags for each additional year of MW disclosure. Firm–years with long‐standing MW disclosures (5 or more consecutive years) have the highest audit fees and the longest audit report lags. Our findings also reveal a significant increase in the likelihood of misstatements during the first and second consecutive years of MW disclosures, and a consistent and notable rise in discretionary accruals over the initial 4 consecutive years of MW reporting for these firms. Overall, our results highlight the financial repercussions for firms that do not promptly address MWs in their internal controls. These consequences include higher audit fees, extended audit report lags, and declining financial reporting quality.

Pengaruh Profitabilitas, Solvabilitas, Umur Perusahaan, Fee Audit, dan Ukuran KAP Terhadap Audit Delay

This study aims to empirically prove the influence of profitability, solvency, company age, audit fees and size of the public accounting firm on audit delay. This research is quantitative research using secondary data obtained from company annual reports. The population in this research is non-cyclical consumer sector companies listed on the Indonesia Stock Exchange in 2019-2021. The number of samples used in this research was 135 data. The data analysis technique used is multiple linear regression analysis. Based on the results of the analysis, it is known that simultaneously the variables profitability, solvency, company age, audit fees and the size of the public accounting firm influence the audit. while partially the solvency variable has a significant effect on audit delay, while the variables profitability, company age, audit fees and KAP size partially have no effect on audit delay.

Competitive Strategies for Small Audit Firms

Synopsis The research problem We examine whether small audit firms adopt niche strategies to compete in the public company audit market. To that end, we focus on auditors servicing clients from one industry only (which we label as a nationwide single-industry focus) and test its association with audit quality and pricing. Motivation Prior research on auditor competition has mainly focused on the large (mainly Big Four) audit firms. While large and small audit firm markets are two distinct markets, little is known about competitive strategies of small audit firms in the public company audit market. The test hypotheses Our first hypothesis is that small audit firms adopting a single-industry focused strategy supply higher audit quality compared with audit firms that do not adopt a single-industry focused strategy or a simple industry specialization strategy, ceteris paribus. Our second hypothesis is that small audit firms adopting a single-industry focused strategy engage in discount pricing compared with audit firms that do not adopt a single-industry focused strategy or a simple industry specialization strategy, ceteris paribus. Target population The U.S. commercial banking sector covering the period 2004–2020. Adopted methodology Multivariate analyses adopting linear and probit models. Analyses To test our first hypothesis, we run a bank audit quality model using loan loss provisions as the dependent variable for our main analyses. Subsequent analyses adopt restatement, going concern, and internal control weaknesses models. To test our second hypothesis, we rely on a bank audit fee model. All models include relevant controls established in previous research and those for self-selection. Findings The evidence suggests that small audit firms adopting a nationwide single-industry focus are able to provide higher audit quality (compared with other rivals, even industry specialists) while at the same time charging lower audit fees implying cost efficiencies that are passed on to the client due to their focused expertise.

Audit Committee as A Moderating Variable: Factors Influencing Audit Quality in Financial Sector on the IDX

This study aims to determine the effect of audit quality, namely audit tenure, audit rotation, and audit fees on audit quality in financial sector companies listed on the Indonesia Stock Exchange. In addition, this study also aims to determine whether the audit committee can be used as a moderating variable in the model. The type of data used in this research is secondary data. The technique of determining the sample is using purposive sampling. The samples obtained in this study were 17 manufacturing companies listed on the IDX from 2017 to 2021. The data analysis technique used was panel data regression analysis and interaction test (moderating) which was carried out with the help of EVIEWS version 10 software. The results in this study indicate that partial tenure audits have a positive effect on audit quality and are not significant. Audit rotation has a negative effect on audit quality and not significant. Audit fees have a negative effect on audit quality and not significant. The audit committee is unable to moderate audit tenure, audit rotation, audit fees on audit quality. The audit committee is unable to moderate audit tenure, audit rotation, audit fees on audit quality.

Regulatory intensity and audit fees

Regulatory intensity and audit fees

Financial statement comparability and audit fee: Evidence from Turkiye

Financial statement comparability and audit fee: Evidence from Turkiye

The Effect of Audit Report Lag, Regulation, Audit Fee Stickiness on Audit Quality with Economic Failure as a Moderating Variable

The Effect of Audit Report Lag, Regulation, Audit Fee Stickiness on Audit Quality with Economic Failure as a Moderating Variable

Digital transformation and corporate audit risk: Mediating effects of auditor behavior

Digital transformation has emerged as a critical factor in shaping the modern business landscape, with significant implications for corporate governance and audit risk. This study examines how digital transformation affected corporate audit risk in Chinese A-share listed companies from 2011 to 2022. Employing comprehensive empirical analyses, we discover that corporate audit risk is greatly decreased by digital transformation, with this relationship partially mediated by changes in audit fees, audit input, and audit opinions. The effects are more pronounced in state-owned firms. Our findings highlight the importance of integrating digital tools in auditing practices to mitigate risk and enhance audit quality. This study contributes to the understanding of how digital transformation influences auditor behavior and audit processes, providing valuable insights for policymakers and corporate managers in the digital era.