The logarithm logAF of the auditfee of the audited companies is used as the dependent variable. The scale of board of directors, scale and ratio of independent directors, ratio of shares held by senior executive and ratio of shares held by the board of directors, and share concentration are used as the independent variants. Some re- searches indicate that the nature and ratio of the majority ownership will also affect the company auditfee, so this paper introduces the nature and ratio of the majority ownership into the equation as the independent variants. The above variants are used as the variants of the company governance factors. For the performance indicators reflecting the company profit and loss management level such as sensitive area, accounting and tax difference and non-recurring loss and profit, only the non-recurring profit and loss is selected as the balance indicator due to data collection difficulty. The ratio of stock in total assets, ratio of accounts receivable in total assets and asset debt ratio are used as the control variants to measure the company financial risk. For specific variants, refer to the Table 1. The auditfee, scale of board of director, scale of independent directors, ratio of independent direc- tors, ratio of senior executive share, ratio of shares of board of directors, stock right concentration, total assets and ratio of stock in total assets, non-recurring losses and profits, ratio of accounts receivable in total set and debt ratio of asset are identified according to actual data. If the direct controlling shareholders are government and consolidation of two posts, the variable value equals to 1, otherwise it equals to 0. The stock right concen- tration is measured by the share ratio of top five shareholders.
However, more auditors provide an audit service and non-audit services simultaneously after being appointed as an independent auditor, even though it is initial audit. Although not considered a general matter, certain exceptional factors may apply. In this research, we focus on the provision of non-audit services without additional fees by an accounting firm in order to win an external audit contract. Therefore, a new auditor is more likely to receive a level of total fees similar to those paid to the predecessor, while also providing additional non-audit services which were not provided by the predecessor. Moreover, although additional fees are not charged for these non-audit services provided, the officially reported audit fees are lower than those of the previous auditor because of the published division of audit fees and non-audit fees, which can be misrepresented as an initial auditfee discount.
from the regression result, which is consistent with the traditional auditfee model. IPO auditfee is affected by the client scale and the auditor scale. When the auditors simultaneously provide capital verification and IPO audit service, the auditfee price is higher. The auditfee of IPO company listed the Shanghai stock market is higher than that of Shenzhen stock market. Our regression result has further proven the traditional auditfee model. In addition, we analyse the unique factor of IPO, and obtain some conclusions different from the annual report audit. the significant purchase, the sale, the replacement of asset in IPO period usually cause the auditfee increase; when the auditors simultaneously provides capital verification and IPO audit service, the auditfee price is higher.
Based on the results from testing H1, there is a significant difference between the auditfee of family and non-family firms. This shows that on average, family firms pay less for audit fees. According to the agency theory, however, there are motives for family firms to maximize their personal benefits and influence the process of financial reporting, which results in increased agency costs. As a result, increased agency costs require risk evaluation and high audit efforts, which result in higher audit fees. On the other hand, family ownership can also be considered for the improvement of internal control and decreasing the conflict of interests between managers and owners, and therefore results in decreased audit risk evaluation and also decreased auditfee, as our research shows.
It means that the company’s financial condition does not moderate the effect of audit quality on giving going concern opinion. This can happen because the giving going concern opinion is not only based on the company’s financial condition, but also internal and external issues of the company (SA Seksi 341). SA Seksi 341 mentions that internal company problems may include work strikes or labor difficulties, substantial reliance on certain projects, non- economic long-term commitments and resource requirements to significantly improve operations. Examples of external problems that have occurred are complaints of court suits, the release of laws or other matters which may jeopardize the entity’s ability to operate; Loss of franchise, license or patent; loss of major customers or suppliers; And losses due to major disasters such as earthquakes, floods, uninsured or insured droughts but with an inadequate amount of coverage.
The findings of this study also reveal that audit fees significantly negatively affect audit quality. The result of this study is not consistent with prior studies (e.g. Hoitash et al., 2007; Simunic, 1980; Sundgren and Svanström, 2013), who argued that low audit fees lead to the decreasing number of auditors and shorter time of auditing which results in lower audit quality. In contrast, the result of this study suggests that high audit fees can lead to an independence issue for auditors. When the auditor receives high audit fees from their clients, the auditors may allow the client to engage in opportunistic earnings management. Thus, the results of this study support Kinney and Libby (2002) who stated that ''unexpected non-audit and audit fees may more accurately be likened to attempted bribes and will reduce the quality of reported earnings through the auditor's reduced willingness to resist client biases to manage earnings” (p.109). The results also suggest that high audit fees make them more economically dependent on their clients which can lead to the independent issues of auditors (Wooten, 2003).
<Table 4> illustrates the results of our ordered probit regression analysis, testing our second hypothesis; whether audit fees influence post year credit ratings (t+1 period). Alissa (2013) suggests that management decisions, economic conditions, industry trends and management errors within period t have the potential to distort long term credit rating; therefore, ‘capital structure adjustments may not be timely enough to allow firms to move closer to their expected ratings in period t. Therefore, we include a t+1. Credit ratings agencies may perceive higher audit fees as a form of collusion between auditor and client firm. A lower auditfee can be considered as a proxy for strong corporate governance. We find a negative association between audit fees and credit ratings in t+1 period for Big4 auditors at the 5% level, suggesting that increased audit fees negatively affect credit ratings in the following period. Thus, a negative relation between audit fees in period t and credit ratings in period t+1 signals strong internal controls and corporate governance. Due to fierce competition in audit contracts among Big4 auditors, audit fees are less likely to significantly increase compared to Non-Big4 firms. Therefore, credit ratings agencies analysts may make decisions based auditfee.
This paper investigates the relationships between non-audit services, auditfee, audit hours and accounting quality. Previous studies have not provided consistent results for how simultaneous provision of audit and non-audit services by an independent auditor to a client company affects the audit quality. In addition, further studies have identified endogeneity in research method as the primary reason. Therefore, this study analyzed audit quality comprehensively using empirical analysis on data specific to Korea. This study employs research methods contrasting with existing studies in order to present a solution for the controversy related to the endogeneity from the effects of non-audit service provided by an independent auditor on audit quality. This study used audit compensation and abnormal accruals variables simultaneously, and audit time variable includes empirical data from Korean clients for comprehensive analysis. Study results found that the non-audit service significantly affects audit service quality before controlling for endogeneity. However, after controlling for endogeneity, even when the same independent auditor provides audit and non-audit services together, it did not affect the accounting quality.
joint provision of non-audit services potentially impairs auditors’ independence. In contrast, Umar (2012) investigates the stakeholders’ perception of non-audit services provision via auditor independence in Nigeria during the period 2005 to 2010; the findings reveal that there are a number of threats to auditor independence and one of which is familiarity, which comes as a results of long-term audit firm-client relationship. Also, Martinez and Moraes (2014) investigated the linkage between fees pay to auditors and firm performance of Brazilian listed companies from 2009 to 2010. Using Tobin’s q as a measure of firm performance, their results showed that there is a positive relationship between audit fees and firm value. In like manner, Farouk and Hassan (2014) examined the effect of audit quality and financial performance of listed cement firms in Nigeria. Using the correlational and ex-post facto designs, they employed multiple regression analysis to analyse the data. The findings show that auditor independence and auditor size have significant effects on the financial performance of the listed cement firms in Nigeria, with auditor independence having more influence than auditor size on financial performance. However, Sayyar, Basiruddin, Abdul Rasid, and Elhabib (2015) further investigated the impact of audit quality on firm performance in Malaysia; using multivariate regression analysis, the study found that there is insignificant link between audit quality variables (audit fees and audit firm rotation) and Return on Asset. Similarly, while auditfee is significantly and positively related to Tobin’s Q; audit firm rotation is insignificantly related to Tobin’s Q.
This part aims to find answers of research questions by examining compositions of NAS fees in researched companies in 2015, observing trends of their audit and non-audit fees and exploring reasons behind trends. All companies in different 5 industries were picked up from constitutes of the S&P 500 index, exclude omit information of Netflix company and Campbell Soup company, because their information cannot be found in the DataStream. These 5 industries include integrated oil & gas industry, banking industry, pharmacy industry, Internet software & services industry and packaged food & meats industry, the criteria to catalog industries is based on the Global Industry Classification Standard. There are 61 companies selected from the S&P 500 index in these 5 industries, the newest data is employed, figures of audit and non-auditfee in 2015 are collected manually from 61 companies’ 2015 proxy statements. Companies’ audit and non- audit fees and their percentages in 2015 are shown in the Appendix 1.
Auditfee is also regarded as one of the proxies that is adopted for the quality of audit to be measured. The amount that the auditor charged for the performance of audit process and for the accounts of a firm is what is regarded as audit fees (Walid, 2012). Audit fees that are high are reflected in higher costs which result from greater quality of audit (Okolie, 2014). According to Moizer (1997), audit fees are related with higher quality of audit resulting in higher reputation of auditors. A lot of studies have been done to look at the association which exists between fees of audit as well as the quality of audit. Audit fees and audit quality in Nigeria was examined by Onaolapo, Ajulo and Onifade (2017) and sample of cement corporations that are listed on the floor of Nigerian Stock Exchange was used. The result reveals that client size, auditfee, leverage ratio and audit tenure reveal a joint significant association with the quality of audit. Also, indicates that auditfee particularly has an impact that is significant and positively associated to the quality of audit. Aliu, Okpanachi & Mohammed (2018) investigates audit fees as well as audit quality of companies listed on the downstream sector of petroleum industry in Nigerian. The finding illustrates that auditfee as has insignificant and negative association with the quality of audit. H0 3 : auditfee does not have any significant relationship with audit quality of quoted
Gonthier-Besacier and Schatt (2007) indicated that external audit fees paid by listed French companies have an important and significant association with auditee size, auditee risk and auditor size. Meanwhile, Joshi and Bastaki (2000) conclude that audit fees paid by Bahrain listed companies rely on size of the reporting entity, profitability, company risk, company complexity and providing non-audit services. Furthermore, Bedard and Johnstone (2010) pointed out that audit tenure is positively associated with the level of external auditfee. Moreover, they suggest that the closer association between external auditors and their clients can generate a financial dependence of auditors on their clients which threatens audit independence. The study of Ahmed and Goyal (2005) examines the determinants of audit fees charged to listed companies in South Asia including Bangladesh, India and Pakistan. They show that auditor size and auditee size are the most important determinants of audit fees, but the results indicated that audit fees and auditee complexity are not associated. To sum up the above, auditfee structure has been displayed as complex by the empirical research of auditfee determinants in different countries. Nearly all research has shown connections between auditee size, auditee risk, and auditor size and audit fees. Research indicates that, in specific situations, investors may even trust companies that pay high audit fees. Furthermore, these results also show that the concern about audit independence impairment derived from high external audit fees is reasonable. Consequently, it is important to regulate audit rotation. Furthermore, this finding can be an indication for other countries that audit tenure may cause audit independence impairment.
statement (Deis and Giroux, 1992). Study done by Ghosh and Moon (2003) resulted a finding that audit quality is increasing along with longer audit tenure. Meanwhile, studi of Mai et al. (2008) found that the longer audit tenure, the lower its audit quality. Other factor that is also important in affecting auditor independency is feeaudit. Feeaudit is scale received by the auditor in conducting his/her duty. This besaran fee sometimes make an auditor in dilemmatic position, on one side auditor must be independent in giving opinion on financial report equity relating to the interest of many parties, however, on the other side, auditor also has to fulfill the requirement wanted by by a client paying fee for his/her service, in order to satisfy the client with his/her work and to keep using the service in the future (Ng dan Tan 2003). Competition among PAFs enables them to offer lower price. With this lower fee, PAF has tendency to cutdown several job vacancies, for example by not conducting certain auditing procedure. Empirically feeaudit has proven that that variable very affects audit quality. Several study results found the existence of relationship between audit quality and audit service fee, for example a study conducted by Abdul et al. (2006) and Dhaliwal et al. (2008) that found a proof that feeaudit significantly affects audit quality. Problems of audit quality become global issues, for instance International Forum of Independent Audit Regulators (IFIAR). IFIAR is an international organization from regulators of Public Accountant and Public Accountant Firm assistance and supervisor that are independent towards profession. Regulators attending are led by executive chairmen from institutions that have the authority in assisting and supervising
This thesis documents the influence of the New Zealand KiwiSaver characteristics, audit market factors, non-audit services and board characteristics on audit fees between 2011 and 2013 fiscal years. It documents the first audit pricing study on New Zealand’s defined contribution pension plan, the ‘KiwiSaver’, which adds to the little literature in the pension industry. I find that the KiwiSaver characteristics, including size, risk and complexity, are associated with audit fees, consistent with prior pension plans research and other markets studied. Further, I examine whether audit market factors (measured by Big Four and first year audit) earn auditfee premiums in the industry. Consistent with prior pension plans research I find that the audit market factors have no effect on audit fees in the industry, despite the Big Four firms having a much higher share in the KiwiSaver audit market. I also investigate the impact of the auditor-client relationship on audit pricing and address the KiwiSaver
effect of audit fees, audit tenure of audit quality and information assymetry as intervening variable. Audit quality variables are measured using the KAP size included big four and non big four group of auditor. Auditfee measured by log n, tenure measured by calculate how long the auditor cooperation relationship with the auditee and information assymetry measured by altman z score. The population used in this study is a manufacturing company listed on Indonesia Stock Exchange with the 2013-3017 research year. The results of the tests carried out in this study show that auditfee and audit tenure have significant influenced of audit quality while auditfee do not affect on information assymmetry, audit tenure have significant influenced of information assymmetry and information assymmetry also have significant influenced on audit quality.
Today, in the development world economy the audit system plays important role all over the world. Nowadays, the dynamic development of our economy and the development of auditor activity at the same time creating an investment environment will serve as a key factor in the development of our country's economy.
The Auditors Group: the external auditors 8 were surveyed to find out the belief of those who are in charge of validating the financial statements of Libyan private companies. The target group was the external auditors working in several accounting and auditing offices, corporations and government agencies situated in Tripoli and Benghazi 9 . Furthermore, the auditors group comprises all the four Libyan auditors who stand for the Big Four auditors and representatives in Libya. Despite the fact that law 116/1973, the only legislation that controls the audit profession in Libya, forbids non-Libyans from supplying statutory auditing in the country, the Big Four auditors became involved in partnerships in order that Libyan auditors might become representatives and partners. In fact, Libyan auditors are employed by the Big Four auditors. Besides, Ernst & Young founded their own branch under the name of Ernst & Young and Partners. A personal visit was necessary to the Libyan Accountants’ and Auditors’ Association (LAAA) to get the addresses of the external auditor offices licensed. Nevertheless, some auditors, though registered as chartered accountants, had not started practicing as professional auditors. Moreover, some auditors no longer practised the profession or had got new addresses; others had not yet notified the LAAA of their status. Furthermore, the LAAA list incorporated some names with no mention to the addresses or telephone numbers. This meant that about 30% of the population was not in contact. Thus, the population of this study was confined to Libyan auditors registering with the LAAA and practicing the profession through their offices or companies, and accessible. The questionnaires were handed out to a sample of 150 auditors in all; questionnaires were handed out to a sample of private auditors. A total of 80 questionnaires were received back from this group. Regarding the Libyan general auditing bureau, a personal visit was required to the head office in Tripoli. A list was provided by the Libyan general auditing bureau from the
In relation to the restrain of real activity manipulation, audit committee financial literacy was found to be effective in restraining real earnings management. Lastly, corporate governance attributes (audit committee characteristics specifically, financial literacy) was found to be check-mating real activities manipulation practice of listed manufacturing firms in Nigeria and audit committee independence, size and audit committee meetings are not restraining real activities manipulation practice of listed manufacturing firms in Nigeria. The cumulative impact of all the independent variables put together explain by the dependent variable are up to ( 72.3% , 52.3% and 50.7% ) respectively as indicated by the ( R, R 2 and Adj R 2 ) and the remaining ( 28% , 48% and 49.3% ) was controlled by other factors that were unable to be captured by the model of the study. Similarly the result of F –statistic value of 31.573 implies that the model is well fitted and significant at 1 % and 5%. This provides evidence that the model fits the data well and the joint effect of explanatory variables is statistically significant in explaining the dependent variable. Adjusted R 2 of (.507%)
National institutes should also work on developing the leadership of the profession, in particular those who believe that internal auditors can and should contribute positively to their organizations’ higher strategic-level activities. In addition, at the internal audit practitioner level there is a need to encourage the recruitment and development of those who are willing to take a leadership role in raising the profile, credi- bility, and contribution of the internal audit function. This might mean that CAEs in particular are drawn into discussions about managements’ acceptance of risk and education of audit committee members. It is likely that such debates will be uncomfortable, but given the very strong message from the survey and inter- views, the potential contribution of the internal audit function to risk and governance depends on credibility. Avoiding conflict carries the risk of missing opportunities to raise awareness of the importance of our work.
Admin has the right to modify the Tuition fee, Yearly fee and the Due date to pay the fee. Modification includes the insertion, updation and deletion of the fee amount. Fee modification helps the admin to add the fee amount in future years and our system will work efficiently without any discrepancies. If the admin inserts the wrong information and need to change it, then the updation factor helps to achieve the goal. Deletion of fee is also possible and everything is achieved through Data table.