scholarly journals Audit Office Size, Audit Quality, and Audit Pricing

2010 ◽  
Vol 29 (1) ◽  
pp. 73-97 ◽  
Author(s):  
Jong-Hag Choi ◽  
Chansog (Francis) Kim ◽  
Jeong-Bon Kim ◽  
Yoonseok Zang
Keyword(s):  
Firm Size ◽  
Audit Quality ◽  
National Level ◽  
Audit Fees ◽  
Specific Factor ◽  
Audit Pricing ◽  
Audit Firm ◽  
Industry Leadership ◽  
Office Size ◽  
Office Level

SUMMARY: Using a large sample of U.S. audit client firms over the period 2000–2005, this paper investigates whether and how the size of a local practice office within an audit firm (hereafter, office size) is a significant, engagement-specific factor determining audit quality and audit fees over and beyond audit firm size at the national level and auditor industry leadership at the city or office level. For our empirical tests, audit quality is measured by unsigned abnormal accruals, and the office size is measured in two different ways: one based on the number of audit clients in each office and the other based on a total of audit fees earned by each office. Our results show that the office size has significantly positive relations with both audit quality and audit fees, even after controlling for national-level audit firm size and office-level industry expertise. These positive relations support the view that large local offices provide higher-quality audits compared with small local offices, and that such quality differences are priced in the market for audit services.

The Effect of Supply Chain Knowledge Spillovers on Audit Pricing

2013 ◽  
Vol 26 (1) ◽  
pp. 83-100 ◽  
Author(s):  
Jengfang Chen ◽  
Hsihui Chang ◽  
Hsin-Chi Chen ◽  
Sungsoo Kim
Keyword(s):  
Supply Chain ◽  
Knowledge Spillovers ◽  
National Level ◽  
Audit Fees ◽  
Data Availability ◽  
Audit Pricing ◽  
Audit Firm ◽  
Audit Firms ◽  
Negative Effect ◽  
Office Level

ABSTRACT We present evidence on the effect of audit firms' supply chain knowledge spillover on audit pricing. Analyzing data from Audit Analytics and Compustat for the seven-year period from 2003 to 2009, we find that audit firms' supply chain knowledge has a negative effect on audit fees. Specifically, an audit firm with more supply chain knowledge charges lower audit fees to its clients when the firm also audits its clients' major buyers. In addition, we find that the fee discount is greater when the audit firm possesses major buyer-related supply chain knowledge at the office level compared to the national level. Our findings are consistent, albeit weaker, to an expanded sample of companies that voluntarily disclose their major buyers. Data Availability: The data are publicly available.

Does audit quality mediate the relationship between audit firm size and audit fees

2019 ◽  
Vol 6 (4) ◽  
pp. 279
Author(s):  
Ayman Bader ◽  
Mohammad Ebrahim Nawaiseh ◽  
Halla Noor Nawaiseh
Keyword(s):  
Firm Size ◽  
Audit Quality ◽  
Audit Fees ◽  
Audit Firm ◽  
The Relationship

scholarly journals A Test of Audit Pricing in the Small-Client Segment: A Comment

1995 ◽  
Vol 10 (2) ◽  
pp. 223-233 ◽  
Author(s):  
Willie E. Gist
Keyword(s):  
Product Differentiation ◽  
Firm Size ◽  
Audit Fees ◽  
Price Premium ◽  
Audit Pricing ◽  
Audit Firm ◽  
Size Classes ◽  
Audit Market ◽  
Second Tier ◽  
The U.S

This study is the second to provide a richer test of the association between auditor size and audit fees by using three audit firm size classes in the small-client segment of the U.S. audit market. The finding of a Big 8 (now Big 6) price premium is consistent with Francis and Simon [1]. However, this price premium exists only with respect to local/regional firms. Francis und Simon showed that the Big 8 price premium exists with respect to both second-tier and local/regional firms. The present study also provides evidence of a second-tier price premium over local/regional firms. The results imply product differentiation to both Big 8 and second-tier firms. Plausible reasons for differences in results between the two studies are given.

scholarly journals Dinamika Kualitas Audit Di Perbankan Syariah Di Indonesia

2019 ◽  
Vol 5 (2) ◽  
pp. 177-194
Author(s):  
Riani Riani ◽  
Sepky Mardian
Keyword(s):  
Firm Size ◽  
Audit Quality ◽  
Maximum Level ◽  
Audit Fees ◽  
Firm Reputation ◽  
Audit Firm ◽  
Auditor Tenure ◽  
Independent Audit

This study discusses and understands the competence and independence of auditors on audit quality in sharia banking in Indonesia. While in the discussion the authors analyze the things that are deemed related to the competence and independent audit of auditor tenure or rotation seen through two post-KMK regime and post Act No. 5, Audit firm reputation by looking at audit firm size, audit fees, and auditor competencies determined through background education, certification, experience of work, and frequency of training that followed. The result of the research shows that the limitation of audit tenure does not decrease the quality of audit in sharia banking, the dynamics of audit quality is formed from independent relationship and auditor competence depends on the maximum level of audit

Client-Auditor Supply Chain Relationships, Audit Quality, and Audit Pricing

2014 ◽  
Vol 33 (4) ◽  
pp. 119-166 ◽  
Author(s):  
Karla M. Johnstone ◽  
Chan Li ◽  
Shuqing Luo
Keyword(s):  
Supply Chain ◽  
Audit Quality ◽  
National Level ◽  
Audit Fees ◽  
Audit Pricing ◽  
Industry Specialization ◽  
Supply Chain Relationships ◽  
Revenue Cycle ◽  
The City

SUMMARY: We investigate the association between auditors' supply chain knowledge and companies' audit quality and audit pricing. Auditor supply chain knowledge is a specialized understanding of information and processes regarding accounting and auditing issues that relates to both a supplier and its major customer, regardless of industry commonalities, that is particularly useful for understanding complexities associated with the revenue cycle. We find that auditors' supply chain knowledge at the city level is associated with higher audit quality and lower audit fees, compared to companies employing auditors with supply chain knowledge at the national level or employing auditors without supply chain knowledge. Such effects are stronger for supplier companies that derive a high proportion of revenue from their major customers, and when the revenue cycle for the supplier companies is more important. We obtain these results while controlling for the usual determinants of audit quality and fees, along with auditors' industry specialization.

Does audit quality mediate the relationship between audit firm size and audit fees

2019 ◽  
Vol 6 (4) ◽  
pp. 279
Author(s):  
Halla Noor Nawaiseh ◽  
Ayman Bader ◽  
Mohammad Ebrahim Nawaiseh
Keyword(s):  
Firm Size ◽  
Audit Quality ◽  
Audit Fees ◽  
Audit Firm ◽  
The Relationship

scholarly journals Audit Firm Size, Audit Fee, Audit Reputation and Audit Quality: The Case of Listed Companies in Vietnam

2017 ◽  
Vol 9 (1) ◽  
pp. 429 ◽  
Author(s):  
Ngoc Kim Pham ◽  
Hung Nguyen Duong ◽  
Tin Quang Pham ◽  
Nga Thi Thuy Ho
Keyword(s):  
Firm Size ◽  
Audit Quality ◽  
Stock Exchange ◽  
Critical Role ◽  
Audit Fees ◽  
Listed Companies ◽  
Developed Countries ◽  
Audit Firm ◽  
Big 4 ◽  
Audit Firms

Audit quality is considered as an essential factor affecting the reliability of financial information. The aim of this study is to assess the effects of audit firm characteristics, including audit reputation, audit fees and audit firm size, on audit quality. A sample of 192 companies listed on Hanoi and Ho Chi Minh Stock Exchange for the period of 2006-2014 was selected. Multiple regression was used to analyze the data. The findings show that Big 4 auditors in Vietnam provide high audit quality than non-Big 4 auditors. Interestingly, in Vietnam context, except for the audit firms in the Big 4 group, the findings suggest that smaller audit firms provide better audit quality. Additionally, the results reveal that the more audit fees the auditors receive, the lower audit quality they provide. The critical role of audit quality has attracted significantly scholarly attention, however, prior studies have mainly focused on firms in developed countries. Little is known about audit quality in an emerging economy context such as Vietnam. This study adds to the limited number of studies on audit quality of listed companies in emerging economies. 

Proposal readability, audit firm size and engagement success

2019 ◽  
Vol 34 (8) ◽  
pp. 871-894 ◽  
Author(s):  
Yu-Tzu Chang ◽  
Dan N. Stone
Keyword(s):  
Firm Size ◽  
Local Governments ◽  
Audit Quality ◽  
Audit Fees ◽  
Content Type ◽  
Audit Firm ◽  
Flesch Reading Ease ◽  
Service Contracts ◽  
Auditor Selection ◽  
State And Local

Purpose This paper aims to examine the effects of firm size on audit proposal readability and audit proposal readability on auditor selection using readability metrics. Design/methodology/approach Adopting the Flesch reading ease readability formula, the authors analyze the readability of 370 hand-collected audit proposals submitted by audit firms for US state and local governments’ audit service contracts. Findings The authors find differences in readability across audit firm size, specifically the proposals written by smaller firms are more readable than those submitted by larger firms. The results further indicate that readability metrics correlate with auditor selection, i.e. an increase in audit proposal readability from the first to third quartile improves the likelihood of a firm winning the engagement by about 6 per cent, ceteris paribus. In addition, while audit fees and an existing auditor–client relationship are associated with engagement success, proxies for audit quality (i.e. audit firm size, audit experience of lead partner) are not. Research limitations/implications The Flesch reading ease measure is a simple linear combination of text attributes, which assumes that readability is a single, unidimensional construct. Simple readability metrics, such as the Flesch reading ease, may confound environmental complexity with readability. Practical implications Readability improves audit proposal success. Originality/value The results provide insight to accounting stakeholders regarding the potential influence of readability on audit firm selection. In short, readability matters.

scholarly journals Determinants of Audit Quality: Evidence from Nigerian Listed Insurance Companies

2020 ◽  
pp. 182-192
Author(s):  
Jayeola Olabisi ◽  
Sunday Kajola ◽  
Matthew Abioro ◽  
Oyefemi Oworu
Keyword(s):  
Cash Flow ◽  
Firm Size ◽  
Significant Relationship ◽  
Audit Quality ◽  
Pearson Correlation ◽  
Audit Fees ◽  
Least Square ◽  
Insurance Companies ◽  
Audit Firm ◽  
Ex Post

The study examines the factors that determine audit quality among listed insurance companies in Nigeria. The study adopts Ex-post facto research design, and 15 companies are purposively selected, out of 25 listed insurance companies in Nigeria as of 2018. Panel data is extracted from the annual account and reports of the selected companies over a period of ten years (2009–2018). Pearson correlation analysis, Ordinary Least Square (OLS) and Regression are the statistical tools used for the analysis. The results of the study reveal a significant relationship between the audit firm size, audit tenure, audit fee, cash flow and audit quality (p < 0.05). However, there is no significant relationship between auditors independence, joint audit and audit quality (p > 0.05). The study concludes that audit fees, audit firm size, audit tenure and cash flow from operations are major determinants of audit quality as each of them has significantly contributed to audit quality of listed insurance companies in Nigeria. Therefore, the Nigerian listed insurance companies should place a high premium on audit firm size, audit fees, and short term audit tenure when engaging services of an audit firm.

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