Audit fee trends from 2000 to 2014

Abstract

Purpose Setting audit fees is a persistent source of stress for auditors who must, on one hand, comply with the increasing government regulations that generally cause costs to rise; and on the other hand, respond to client pressures to keep audit fees down. In the post-scandal environment of Enron, WorldCom, and the demise of Arthur Andersen, policy makers have introduced additional costs for auditors by increasing regulations and creating a new industry watchdog – the Public Company Accounting Oversight Board (PCAOB). In this environment of constant pricing-cost tension for the auditor, the purpose of this paper is to examine audit fee trends over an extended period, 2000-2014. Design/methodology/approach The authors calculate the unexpected audit fees using the audit fee model. The authors examine audit fee trends while controlling for changes due to inflation, auditor wages, and other audit fee determinants. Findings The key findings indicate that audit fees increased in response to the promulgation of new audit regulations requiring additional audit work, the Sarbanes-Oxley (SOX) Act of 2002 and Auditing Standard No. 2 in 2004. Additionally, the authors find that audit fees decreased after new regulations alleviating audit work, namely the passage of Auditing Standard No. 5 in 2007, and remained unchanged when new regulations had a minimal impact on audit work, namely the Dodd-Frank Act of 2010. Practical implications The findings of this research are relevant to audit clients, auditors, and regulators as they weigh the cost and benefits of significant new audit regulations and their impacts on audit fees. Originality/value Using the more recent US data, the results in this paper show how events changed audit fee trends in recent years. The findings indicate that audit fees increased after the passage of new audit regulations such as the SOX Act of 2002, Auditing Standards No. 2 in 2004, and decreased after the passage of Auditing Standards No. 5 in 2007.

Determining audit fees: evidence from the Egyptian stock market

“…According to prior research on listed companies, audit client risk is an essential determinant of audit fees since it reflects the nature of the company’s business and the monitoring environment it is subjected to Chan et al (1993). Based on previous international research in this area (Gonthier-Besacier and Schatt, 2007; Naser and Nuseibeh, 2007; Dey and Lim, 2018), audit client risk positively impacted audit fees. Bell et al (2001) found that high business risk increased the number of audit hours.…”

Karakteristik Dewan Direksi, Komite Audit, dan Biaya Audit

“…Perusahaan perlu menanggung biaya untuk mengaudit laporan keuangan yang disebut biaya audit (Hendi & Yulinar, 2017). Penetapan biaya audit merupakan hal yang selalu menjadi pertimbangan auditor (Dey & Lim, 2018). Ikatan Akuntan Publik Indonesia (IAPI) menetapkan pedoman pembayaran biaya audit, tetapi pada kenyataannya biaya audit yang dibayar oleh perusahaan berbeda-beda (Wea, 2019).…”

“…Nilai biaya audit dipengaruhi oleh variabel-variabel tertentu. Beberapa penelitian menguji faktor-faktor yang menimbulkan pengaruh terhadap biaya audit, seperti ukuran KAP (Mustapha et al, 2020), effective tax rate, cash tax rate (Onatuyeh & Ukolobi, 2020), rotasi komposisi komite audit (Sellami & Cherif, 2020), dualitas peran CEO (Farooq et al, 2018), pengalaman dewan direksi (Al-Hamadeen et al, 2021), pengalaman komite audit (Drogalas et al, 2020), koneksi politik (Shakhatreh & Alsmadi, 2021), kerumitan audit, risiko audit, karakteristik auditor (Dey & Lim, 2018), dan lainnya. Model penelitian ditunjukkan melalui Gambar 1.…”

Audit fee determinants in small municipalities: Further evidence from Connecticut small towns

“…The municipal audit market was later studied, providing additional insights into determinants of audit fees (Baber, 1983; Baber et al, 1987; Bandyopadhyay & Kao, 2005; Copley, 1989; Rubin, 1988; Ward et al, 1994). Through important meta‐analysis, insight into audit fees was further expanded (Carson et al, 2014; Cobbin, 2002; Dey & Lim, 2018; Hay, 2013; Hay et al, 2006; Vermeer et al, 2009). With the recent growth and evolution of the public sector, there is renewed interest in research looking at the impact of these developments on municipal audit pricing (Collin et al, 2017; Hay & Cordery, 2018, 2021a, 2021b; Lapsley & Miller, 2019; Mattei et al, 2021).…”