The Importance of Audit Firm Characteristics and the Drivers of Auditor Change in UK Listed Companies

This paper explores the importance of audit firm characteristics and the factors motivating auditor change based on questionnaire responses from 210 listed UK companies (a response rate of 70%). Twenty-nine potentially desirable auditor characteristics are identified from the extant literature and their importance elicited. Exploratory factor analysis reduces these variables to eight uncorrelated underlying dimensions: reputation/quality; acceptability to third parties; value for money; ability to provide non-audit services; small audit firm; specialist industry knowledge; non-Big Six large audit firm; and geographical proximity. Insights into the nature of 'the Big Six factor' emerge. Two thirds of companies had recently considered changing auditors; the main reasons cited being audit fee level, dissatisfaction with audit quality and changes in top management. Of those companies that considered change, 73% did not actually do so, the main reasons cited being fee reduction by the incumbent and avoidance of disruption. Thus audit fee levels are both a key precipitator of change and a key factor in retaining the status quo

Internal audit department characteristics/activities and audit fees: Some evidence from Hong Kong firms

This study provides preliminary support for the notion that internal audit function assists in reducing external audit effort and fees. Data on internal audit characteristics and activities are obtained from survey respondents of Hong Kong companies and audit fee model data are acquired from their annual reports. The results of this study suggest that the external auditor of firms in Hong Kong rely on the internal audit function and subsequently charge a lower fee. Lower external audit fees are associated with a larger internal audit department and certain activities carried out by the internal audit. Specifically, lower external audit fees are associated with more internal audit effort spent on activities relating to financial statements, systems development and maintenance, operating efficiency and effectiveness, fraud investigations and unlimited access to internal auditors’ working papers. The results of this study suggest that the contribution of the internal audit may substitute for some substantive external auditing processes and lower monitoring costs

THE PRICING OF AUDIT SERVICES: EVIDENCE FROM ROMANIA

The main objective of this study is to investigate factors influencing theamount of external audit fees in Romania. Of particular interest is the examination ofthe potential effect of the client size, client complexity, and the size of the audit firmon external audit fees. An audit fee model is used to examine the effect of audit clientsize, client complexity, and the size of the audit firm on the amount of audit fees for asample of audit engagements performed in the tow of Romanian major counties. Thestudy’s results indicate that the amount of external audit fees is significantlyinfluenced by the audit client size, by the amount of turnover, by the number ofemployees. This study is original since it is the first to empirically investigate factorsinfluencing the pricing of audit services in on Romanian audit fee market.Romania, Auditor’s fees, External auditing, Auditors, Modelling

AUDIT FEE ECONOMETRICAL MODELS AN OVERVIEW OF THE AUDITING RESEARCH LITERATURE

Our research intends to present a literature review on studies regarding theaudit fee and its cost behavioral in relation to the audit process. The purpose of the paperis to enhance and synthesize the main results of auditing research literature impendingaudit fee approximation. Hence, our analysis requires a literature review methodology.We start by introducing the concept of audit fee; the first part of the paper follows the shifttaking place in the cost behavior of audit in a diachronic study methodology. The main partof the paper discusses empirical studies on audit fee by closely analyzing their researchdesign, the employed research methodology and the obtained results. The originality of thestudy, its contribution relies in a consisting and comprehensive overview on papers inauditing research literature that presents audit fee through an empirical approach. Whenin comes to the importance and reliability of such studies further impacts upon therelevance of their results and how they can be used.audit fee, empirical research, econometric model, research literature

Audit market structure, fees and choice in a period of structural change: evidence from the UK – 1998–2003

This paper presents evidence on audit market concentration and auditor fee levels in the UK market in the crucial period of structural change following the PricewaterhouseCoopers’ (PwC) merger and encompassing Andersen’s demise (1998–2003). Given the current interest in auditor choice, analysis is also undertaken at the individual audit firm level and by industry sector. There is evidence of significant upward pressure on audit fees since 2001 but only for smaller auditees. Audit fee income for top tier auditors (Big 5/4) did not change significantly while the number of auditees fell significantly, consistent with a move towards larger, less risky, clients. A decomposition analysis of the aggregate Big 5/4 concentration ratio changes over the period identifies the impact of four distinct consumer-based reasons for change: leavers; net joiners; non-par auditor switches; and (only for the audit fees measure) audit fee changes. Andersen’s demise markedly reduced the level of inequality among the top tier firms but PwC retained its position as a ‘dominant firm’. On switching to the new auditor, former Andersen clients experienced an initial audit fee rise broadly in line with inflation, with no evidence of fee premia or discounting. They also reported significantly lower NAS fees, consistent with audit firms and auditees responding to public concerns about perceptions of auditor independence. There is no general evidence of knowledge spillover effects or cross-subsidisation of the audit fee by NAS. The combined findings provide no evidence to indicate that recent structural changes have resulted in anticompetitive pricing; the key concerns remain the lack of audit firm choice and issues concerning the governance and accountability of audit firms

PENGARUH FEE AUDIT TERHADAP KUALITAS AUDIT DAN DAMPAKNYA TERHADAP INDEPENDENSI AUDITOR (Survey Pada 11 Kantor Akuntan Publik yang Terdaftar di Otoritas Jasa Keuangan Kota Bandung)

ABSTRAK Penelitian ini berjudul “Pengaruh Fee Audit terhadap Kualitas Audit serta dampaknya terhadap Indepedensi Auditor”. Penelitian ini bertujuan untuk mengetahui besarnya Pengaruh Fee Audit terhadap Kualitas Audit serta dampaknya terhadap Indepedensi Auditor pada Kantor KAP di Kota Bandung. Metode penelitian yang digunakan adalah metode deskriptif dan verifikatif. Analisis yang digunakan adalah analisis jalur untuk mengetahui Pengaruh Fee Audit terhadap Kualitas Audit serta dampaknya terhadap Indepedensi Auditor. dengan bantuan IBM SPSS versi 23 for windows. Penulis melakukan penilitian pada Kantor KAP di Kota Bandung. Hasil penelitian Fee Audit terhadap Kualitas Audit berpengaruh signifikan dengan kontribusi pengaruh sebesar 32,3%. Pengaruh (Y) terhadap (Z) berpengaruh signifikan dengan kontribusi pengaruh sebesar 47,4%. Pengaruh tidak langsung sebesar 39,2% dan pengaruh langsung sebesar 13%. Serta total pengaruhnya sebesar 52,2%. Kata kunci: Fee Audit, Kualitas Audit, Indepedensi Audito

Director-auditor link and audit quality: the simultaneous effect of auditor-director attachment on audit fees, non-audit services and audit opinion

Director-Auditor Link and Audit Quality aims to examine the effects of director-auditor link on audit services fee, non-audit services fee and audit opinion. Based on the attachment theory, it is argued that director-auditor link created by interlocking directorates enhances the mutual dependence and trust between the directors and their auditor and this mutuality is expected to influence audit services fee, non-audit services purchased from auditor and audit opinion. Analyses are conducted using data of 759 listed companies on the Bursa Malaysia in 2007 and a two-stage regression method is employed to accommodate the simultaneous equation model. The results show that director-auditor link has a significant negative relationship with audit services fee and significant positive relationships with non-audit services fee purchased from auditor and the issuance of unqualified audit opinion. Thus, the results provide initial evidence on the importance of reviewing the director-auditor link practices in the business environment

PENGARUH INDEPENDENSI, KOMPETENSI DAN FEE AUDIT TERHADAP KUALITAS AUDIT (Survey pada 10 Kantor Akuntan Publik di Kota Bandung)

ABSTRAK Penelitian ini bertujuan untuk mengetahui bagaimana Independensi, Kompetensi, fee Audit, Kualitas Audit dan seberapa besar pengaruh Independensi, Kompetensi, fee Audit, terhadap Kualitas Audit pada Kantor Akuntan Publik di Kota Bandung Pendekatan penelitian yang digunakan dalam penelitian ini adalah analisis deskriptif dan verifikatif dengan menggunakan data primer. Analisis statistik yang digunakan dalam penelitian ini adalah uji asumsi klasik, uji validitas, uji reliabilitas, analisis regresi, korelasi, pengujian hipotesis dengan menggunakan uji parsial dan uji simultan serta analisis koefisien determinasi. Banyaknya populasi penelitian adalah 109 orang, sampel penelitian yang digunakan adalah 82 orang dengan sumber data yang diperoleh melalui hasil pengisian kuesioner. Berdasarkan hasil penelitian yang dilakukan dapat diketahui bahwa secara parsial Independensi, Kompetensi, fee Audit berpengaruh terhadap Kualitas Audit. Dimana besarnya pengaruh Independensi berpengaruh sebesar 26,5% Kompetensi berpengaruh sebesar 19,9% dan fee audit berpengaruh sebesar 16,8% terhadap kualitas audit. Secara simultan Independensi, Kompetensi, fee Audit berpengaruh terhadap kualitas audit dengan kontribusi sebesar 63,2% sedangkan sisanya yaitu sebesar 36,8% merupakan pengaruh dari variabel lain yang tidak diteliti. Kata Kunci : Independensi, Kompetensi, fee Audit, Kualitas Audi

ANALISIS FAKTOR YANG MEMPENGARUHI BIAYA AUDIT EKSTERNAL (Studi Empiris pada Perusahaan Non Keuangan yang Terdaftar di KOMPAS100 Tahun 2014-2015)

This study is conducted to analyze factor influencing external audit fee of non-financial companies. Factor-factor influencing external audit fee is represented by size, profitability, risk, complexity, industry type, status of audit firm, external audit report lag, audit committee independence, account receivable, inventory. This research refers to research conducted by Nasser (2016). The population of study are all non-financial companies listed on the Kompas100 index for the periode 2014-2015. Total sample of 65 companies was determined by purposive sampling method. This study uses Ordinary Least Square for hypotheses testing. The result show that risk, complexity, industry type, status of audit firm were found to have a positive effect with statistical significance on external audit fee. Inventory was found to have a negative effect with statistical significance on external audit fee. Size, profitability, external audit report lag, audit committee independence, account receivable were not to have a significance effect on external audit fee, however it found that has a positive effect