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This study aims to analyze the factors that influence audit quality, namely the audit committee, audit tenure, audit fee, PAF (Public Accounting Firm) rotation, and client company size. The population in this study were all manufacturing companies on the Indonesia Stock Exchange for the 2019-2022 period and the sample of this study was 76 manufacturing companies that met the sample criteria during the study period. The sampling technique in this study used the purposive sampling method and used logistic regression to analyze. Based on the study, it can be concluded that the audit committee, audit tenure, and PAF rotation do not have an effect on audit quality. Meanwhile, audit fees and client company size have a positive effect on audit quality. This shows that large companies are able to pay high fees to auditors will obtain quality audit results. The implications of this study indicate that there is a tendency that auditors in Indonesia will work as well as possible if they get a promising fee, so it is necessary to emphasize to auditors the importance of a professional attitude that a professional's work does not only depend on the fee they get.

Adverse client publicity can entail regulatory scrutiny over audited financial statements and impose political costs on auditors. We use the changes in client publicity caused by their controlling owners' presence on the Hurun Rich List (the rich listing) in China to test the hypothesis that auditor conservatism increases with client publicity. Our evidence indicates auditors issue more adverse audit opinions to clients and charge higher fees following the rich listing events. Moreover, we observe that auditors strategically respond to clients with different attributes—for clients whose owners accumulated wealth in a more questionable manner, auditors choose more stringent audit reporting to better defend themselves from regulatory scrutiny; for clients without such attributes, auditors primarily rely on increasing audit fees to cope with any post-listing increase in audit risks. Our analyses also suggest the impacts of rich listings tend to be concentrated among large audit firms with stronger reputation concerns or among engagement auditors with more conservative reporting styles. By showing how auditors manage political risks associated with heightened public scrutiny, we contribute to both the auditing and political cost literature.

The aim of this paper is to analyse the relationship between the internal audit function and auditor's fees using a sample of Spanish listed companies between 2003 and 2011. We use the audit fees model that was proposed by Simunic (1980). Our results indicate that fees are greater in those companies that have an internal audit function. In addition, if there are meetings between the audit committee and the internal audit function, this is statistically significant with audit fees. This paper contributes to literature in several ways. Firstly, there are no previous papers in Spain, unlike other contexts, on the relationship between internal audit and auditor fees. Secondly, the empirical results detected in previous studies are conflicting; therefore, there is a need to complement them. Finally, the findings have practical implications for companies, external auditors and regulatory agencies themselves. El objetivo de este trabajo es analizar la relación existente entre la función de auditoría interna y los honorarios del auditor sobre una muestra de empresas que cotizan en el mercado continuo español entre 2003 y 2011. Utilizando el modelo de honorarios de auditoría propuesto por Simunic (1980), los resultados indican que los honorarios de auditoría son mayores en aquellas compañías que cuentan con la existencia de un departamento de auditoría interna. Asimismo, la existencia de reuniones entre el comité de auditoría y la función de auditoría interna es estadísticamente significativa con los honorarios. Este estudio contribuye a la literatura de diversas formas. En primer lugar, no existen trabajos anteriores en España, a diferencia de otros contextos, sobre la relación entre auditoría interna y honorarios. En segundo lugar, los resultados empíricos detectados en estudios previos resultan contradictorios por lo tanto lleva a la necesidad de complementarlos. Finalmente, los resultados tiene implicaciones prácticas para la empresa, los auditores externos y los propios organismos reguladores.

We study the effects of cross-listings on audit fees. We first develop a model in which legal environments play a crucial role in determining the auditor's legal liability. Our model and analysis predict that auditors charge higher fees for firms that are cross-listed in countries with stronger legal regimes than they do for non-cross-listed firms and that the cross-listing audit fee premium increases with the difference in the strength of legal regimes between the cross-listed foreign country and the home country. We then empirically test these predictions. The results of our cross-country regressions strongly support our predictions. In addition, we find no significant cross-listing fee premium for firms that are cross-listed in countries whose legal regimes are no stronger than those of their home countries. This suggests that cross-listing audit fee premiums are associated with increased legal liability and not with increased audit complexity per se. Our findings help explain why cross-listing premiums occur and what determines their magnitude.

This study uses quantitative methodology to examine the factors that influence audit fees in companies listed on the LQ45 index from 2019 to 2023. The independent factors studied were audit quality, company size, company complexity, company risk, managerial ownership, and institutional ownership. Data collection was carried out by purposive sampling, resulting in 115 observations from 32 companies over a five-year period. This study uses two estimation models, namely Ordinary Least Squares (OLS) and OLS with robust standard errors, to test the reliability of the results and minimise potential heteroscedasticity. The research findings show that audit quality, business complexity, firm risk, and institutional ownership have a positive and significant effect on audit fees. This suggests that auditors set higher fees for companies with high levels of operational risk and complexity, as well as the influence of strong institutional ownership, due to the high need for oversight and assurance of the independence of financial statements. On the other hand, firm size and managerial ownership do not have a significant effect on audit fees, which suggests that these factors are not always the main determinants in determining audit fees. This finding supports agency theory, which emphasises that audit fees reflect a mechanism to mitigate conflicts of interest between shareholders and management. Thus, audit fees act as a form of control and protection against the risk of asymmetric information. This research provides insights for companies and auditors to develop effective audit fee management strategies and strengthen accountable and transparent corporate governance.

This study examines whether and how audit quality proxied by the magnitude of absolute discretionary accruals is associated with abnormal audit fees, that is, the difference between actual audit fee and the expected, normal level of audit fee. The results of various regressions reveal that the association between the two is asymmetric, depending on the sign of the abnormal audit fee. For observations with negative abnormal audit fees, there is no significant association between audit quality and abnormal audit fee. In contrast, abnormal audit fees are negatively associated with audit quality for observations with positive abnormal audit fees. Our findings suggest that auditors’ incentives to deter biased financial reporting differ systematically, depending on whether their clients pay more than or less than the normal level of audit fee. Our results are robust to a variety of sensitivity checks.

Several studies report an audit fee premium for auditor industry expertise measured at the office level. We extend this line of research by examining whether there is a fee premium for auditor industry expertise measured at the partner level. Using Australian data, we show that the coefficient for partner-level industry expertise is highly significant and economically important. This is consistent with industry knowledge or expertise residing in the human capital of individual engagement partners. Inconsistent with prior research, we show that there is no auditor industry expertise fee premium at the audit office level when partner-level expertise is controlled for. Consistent with prior research, we find little evidence of a fee premium at the national level. The results suggest that the auditor industry expertise fee premium is mainly a partner-level phenomenon, casting doubt on the belief that industry knowledge or expertise is distributed across engagement partners within an audit office.

Purpose The literature on the influence of audit committees (AC) and cosmetic accounting (CA) is scarce. AC plays a unique and vital role in boosting earnings reliability in countries with weaker application of accounting standards or weaker legal protection for investors. AC, therefore, are considered to be one of the essential tools available to directors in supervising management decisions regarding financial reporting. This paper aims to examine the influence of AC characteristics (ACC) on CA and how this relationship is moderated by the audit fee. Design/methodology/approach This study used probit regression to analyze 1,218 firm-year observations of listed companies in Tehran Stock Exchange from 2014 to 2020. Findings The results show that AC financial accounting expertise, AC independence, female AC membership and AC tenure were negatively related to CA. The negative relationship is highly pronounced when a firm incurs higher audit fees, and audit fees moderate the relationship between ACC and CA. Results for the robustness checks show that only AC independence was significant, and the results of other characteristics were not significant. Research limitations/implications This research was conducted in an Iranian setting where the formation of ACs is on the verge of regulation; therefore, the data used for the study only contains the seven-year period of ACs’ statutory activity. In addition, a lack of consensus on the precise measures of an AC’s effectiveness could be considered as a restrictive factor. Originality/value The findings provide an initial insight into the effect AC on CA and moderating effect of audit fee on the relationship between ACC and CA.

Both the GAO (Public accounting firms: mandated study on consolidation and competition. GAO, Washington, 2003; Audits of public companies: continued concentration in audit market for large public companies does not call for immediate action. GAO, Washington, 2008) and the US Treasury (Advisory committee on the auditing profession: final report, 2008. http://www.tres.gov/offices/domestic-finance/acap/docs/final-report.pdf) have implied that the Big 4 dominated US audit market lacks competition. More recently, the PCAOB has expressed a somewhat different concern, i.e., that because audit committees may be primarily interested in negotiating a lower audit fee (rather than championing higher audit quality) for their clients, fee competition in the US audit market could pressure the incumbent auditor to compromise on audit quality (Doty in Keynote address: the reliability, role and relevance of the audit: a turning point, 2011. www.pcaobus.org). We utilize the notion of counterfactual fees chargeable by auditors to assess fee competition and investigate competing views on the relation between fee competition among Big 4 auditors and audit quality in US local audit markets. To operationalize fee competition at the client-level in the context of each local audit market, we compute a separate counterfactual audit fee that would be charged by every other Big 4 auditor for that particular engagement and use the minima of the counterfactuals. We validate our audit fee competition metric by showing a positive relation with the incumbent auditor’s switching risk. Collectively, our findings suggest that fee competition is useful as a mechanism for improving audit quality in the highly concentrated US audit market, albeit only in local audit markets where the incumbent auditor has below-median market power and only for higher quality clients. Overall, our findings speak to the interplay between fee competition and auditor incentives and are of potential interest to regulators such as the PCAOB concerned about competition in US audit markets.

Audit fee serves not only as a compensation for external audit firms to ensure the accuracy and reliability of a company’s financial statements, but it also plays a role in the financial market, by simultaneously reflecting the accounting quality and overall standing of the auditee. This exploratory study aims to identify the factors determining the audit fees of Central and Eastern European companies taking into account periods before and during COVID-19 pandemic. Our findings indicate an upward trend in audit fees for CEE companies during COVID-19, with total assets of auditee and affiliation with Big Four auditors being positive determinants in both periods. / Audito mokestis parodo ne tik kompensaciją išorės auditoriams už įmonės finansinių ataskaitų tikslumo ir patikimumo užtikrinimą, bet ir atlieka svarbų vaidmenį finansų rinkoje – atspindi audituojamos įmonės apskaitos kokybę ir bendrą įmonės būklę. Šiuo tyrimu siekiama nustatyti veiksnius, nulemiančius Vidurio ir Rytų Europos įmonių audito mokesčio dydį, atsižvelgiant į laikotarpius iki COVID-19 pandemijos ir jos metu. Tyrimo rezultatai parodė, kad COVID-19 pandemijos laikotarpiu audito mokesčiai padidėjo, o audituojamos įmonės turtas ir auditorių priklausymas Didžiojo ketverto įmonėms buvo reikšmingi audito mokesčius abiem laikotarpiais didinantys veiksniai.