Does municipal ownership affect audit fees?

Axén, Linus; Tagesson, Torbjörn; Shcherbinin, Denis; Custovic, Azra; Ojdanic, Anna

doi:10.1007/s10997-018-9438-4

Cited by 11 publications

(6 citation statements)

References 74 publications

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“…The regression results support the cost-benefit principle and the risk-benefit equilibrium principle we proposed in the hypothesis development, showing that higher accounting information consistency (smaller value of Consistency) can significantly reduce companies' audit fees. Theoretically and logically, our result is similar to those of existing studies (Cho et al, 2017;Castro et al, 2019;Axén et al, 2019;Smith et al, 2019;Bastos et al, 2021), and it is also supported by research findings from developing countries (Wang et al, 2020;Tsai & Huang, 2020;Li et al, 2020;Chan et al, 2021;Rahayu et al, 2021;Alharasis et al, 2022). Therefore, auditors who audit high-cost or high-risk accounting information (manifested as low consistency) will require a higher audit premium, compensating for their costs or risks and ensuring the accounting information quality and audit quality.…”

Section: Multiple Regression Results and Analysissupporting

confidence: 89%

“…In addition, audit fees are subject to other factors. In the area of corporate governance, for the nature of corporate ownership, Axén et al (2019) found that municipal corporations pay significantly lower audit fees than equivalent private companies, mainly due to their lower commercial risks. Smith et al (2019) found that board-level risk committees and more active audit committees may help mitigate the audit fees premium about the risks of breaches.…”

Section: Literature Reviewmentioning

confidence: 99%

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Accounting Information Consistency and Audit Fees: Evidence from China

Fan,

Zhang

2023

AAMJAF

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This article uses the financial data of China’s A-share listed companies from 2007 to 2020 and examines the impact of accounting information consistency on audit fees. The study finds that higher consistency is significantly associated with a firm’s lower audit fees after controlling for other factors. After the robustness test, the conclusion remains unchanged. The mechanism test finds that higher consistency reduces audit risks and thus reduces the company’s audit fees. Further research finds that the reducing effect of consistency on audit fees is significantly more apparent in companies with higher financial leverage. Overall, this article expands the research on the influencing factors of audit fees from the consistency perspective. The research conclusions have reference value for information users to use accounting information to supervise governance, improve the quality of financial statement disclosure, and reduce the company’s audit fees.

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Section: Multiple Regression Results and Analysissupporting

confidence: 89%

Section: Literature Reviewmentioning

confidence: 99%

Accounting Information Consistency and Audit Fees: Evidence from China

Fan,

Zhang

2023

AAMJAF

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“…For the public sector, very few recent studies could be identified. A study by Bradbury (2017) investigated the outsourcing of public sector audits to audit firms, and Axén et al (2019) investigated the comparison of external audit firms' fees for municipalities and equivalent private sector organisations. However, it appears that studies on the link between audit outcomes and audit fees are limited.…”

Section: Literature Review and Hypothesesmentioning

confidence: 99%

Main Predictor(s) of Good Corporate Governance in National Government Departments: A Decision-tree Classification and Prediction Analyses

Erasmus,

Coetzee

2024

Politeia

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Purpose: Good public sector corporate governance leads to good management, stewardship of public wealth, public engagement, and ultimately, better outcomes for citizens. As South Africa has one of the worst Gini coefficients in the world, its public sector should effectively address the challenges of inequality, poverty, and unemployment. Yet, almost 30% of national and provincial government departments obtain unfavourable audit outcomes. Methodology: Supporting the drive for clean audit outcomes that equate to good corporate governance, the research objective was to determine the predictors of national government departments’ corporate governance success. The study used CHAID (chi-squared automatic interaction detection) analyses, a decision-tree technique based on information reported over a 13-year period. Findings: The CHAID analyses indicated that national government departments’ corporate governance success is primarily explained by three factors, namely: a quality internal audit function (main predictor), the number of fraud incidents, and the number of internal control weaknesses. Implication: Even though all the variables in this study receive attention in literature and regulation, the problem of unfavourable audit outcomes persists. The question is where to focus on resolving the problem. Regulators may take note of where to focus their efforts in strengthening elements of good corporate governance.

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“…Despite municipalities being major economic and social players, studies focusing on the interaction between internal and external auditing among these entities remain relatively small in number compared to the private sector. For municipalities, research has focused on audit fees, audit quality, the audit report lag, procurement practices and determinants of modified audit reports (Axén et al ., 2019; Deis and Giroux, 1992; Marques and Pinto, 2019; Cohen and Leventis, 2013; Paananen, 2016).…”

Section: Introductionmentioning

confidence: 99%

The influence of internal audit departments on external municipal audit reports

Lopes

Almeida

Leite

et al. 2023

JPBAFM

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PurposeThe purpose of this paper is to examine whether the voluntary implementation of an internal audit department (IAD) by municipalities has any influence on external auditors' opinions.Design/methodology/approachThis study population comprises the 308 Portuguese municipalities, from which the authors extracted a sample of 179. Financial and audit reports were collected from the period under analysis (2014–2017). The sample was then divided into two groups: municipalities that had voluntarily implemented an IAD and those that had not. Internal audit departments were characterized according to their robustness – whether they were more or less robust. First, a descriptive statistical analysis of the dataset was performed to analyze the representativeness of the sample and to extract insights. To address the research questions, ordinal random effect regression models were considered.FindingsContrary to the authors' expectations, the voluntary implementation of an IAD had no influence on the audit report type. However, when the authors refined the approach to include the robustness of the IAD, it became clear that this variable does influence the report issued by the external auditor.Originality/valueThis paper contributes to the current literature by determining the effects of the robustness of IADs on municipality audit reports. As far as the authors know, this paper is novel. Since auditing plays an important role in the transparency of public financial statements and in promoting equity, this study shows that a robust IAD is an advantage in the pursuit of these goals.

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Does municipal ownership affect audit fees?

Cited by 11 publications

References 74 publications

Accounting Information Consistency and Audit Fees: Evidence from China

Accounting Information Consistency and Audit Fees: Evidence from China

Main Predictor(s) of Good Corporate Governance in National Government Departments: A Decision-tree Classification and Prediction Analyses

The influence of internal audit departments on external municipal audit reports

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