Audit fee studies, being a tool to assist negotiation between auditors and clients are regularly undertaken all over the world and essentially stem on the factors prevalent in the specific auditing/accounting environments.
The purpose of the study was to examine the determinant of audit fee with empirical evidence from the Ghana stock exchange. Specifically, the study examined audit fee determinant which included the client size, profitability measured by ROA, LOSS, client risk measured by debt ratio, YEAR (season) and MNC.
Using the Simunic (1980) model, this study reveals that client’s size of business, international recognition, affiliation of audit firms (Big four firms) and profitability are significant determinants of audit fee in Ghana. Results in study indicate that ignorance of risk factor by the auditors may pose serious threat to fame and reputation of audit firm along with indication of feeble legal regime in Ghana. The results of the study have significant implications for auditors and firms in negotiating audit fees in Ghana. The results of this study is unique as it is the first study that comprehensively examines determinants of audit fees on listed firms in Ghana
Al-Harshani, M. O. (2008). The pricing of audit services: evidence from Kuwait. Managerial Auditing Journal, 23(7), 685-696.
Al-Shammari, B., Brown, P., & Tarca, A. (2008). An investigation of compliance with international accounting standards by listed companies in the Gulf Co-Operation Council member states. The International Journal of Accounting, 43(4), 425-447.
Ask, J., & LJ Holm, M. (2013). Audit Fee Determinants in different Ownership Structures: The Swedish Setting. Master thesis in Accounting Auditing and Business Analysis. UPPSALA University Diva-potal.
Bedard, J. C., & Johnstone, K. M. (2010). Audit partner tenure and audit planning and pricing. Auditing: A Journal of Practice & Theory, 29(2), 45-70.
Calderon, T. G., Wang, L., & Klenotic, T. (2012). Past control risk and current audit fees. Managerial Auditing Journal, 27(7), 693-708.
Carson, E., Fargher, N., Simon, D. T., & Taylor, M. H. (2004). Audit fees and market segmentation–further evidence on how client size matters within the context of audit fee models. International Journal of Auditing, 8(1), 79-91.
Castro, W. B. D. L., Peleias, I. R., & Silva, G. P. D. (2015). Determinants of Audit Fees: a Study in the Companies Listed on the BM&FBOVESPA, Brazil. Revista Contabilidade & Finanças, 26(69), 261-273.
Causholli, M., De Martinis, M., Hay, D., & Knechel, W. R. (2011). Audit markets, fees and production: Towards an integrated view of empirical audit research. Available on Research Gate.
Che-Ahmad, A., & Houghton, K. A. (1996). Audit fee premiums of big eight firms: Evidence from the market for medium-size UK auditees. Journal of international accounting, auditing and taxation, 5(1), 53-72.
Choi, J. H., Kim, C., Kim, J. B., & Zang, Y. (2010). Audit office size, audit quality, and audit pricing. Auditing: A Journal of practice & theory, 29(1), 73-97.
Craswell, A. T., Francis, J. R., & Taylor, S. L. (1995). Auditor brand name reputations and industry specializations. Journal of accounting and economics, 20(3), 297-322.
Firth, M. (1997). The provision of non?audit services and the pricing of audit fees. Journal of Business Finance & Accounting, 24(3), 511-525.
Francis, J. R. (1984). The effect of audit firm size on audit prices: A study of the Australian market. Journal of accounting and economics, 6(2), 133-151.
Francis, J. R., & Simon, D. T. (1987). A test of audit pricing in the small-client segment of the US audit market. Accounting Review, 145-157.
Fleischer, R., & Goettsche, M. (2012). Size effects and audit pricing: Evidence from Germany. Journal of International Accounting, Auditing and Taxation, 21(2), 156-168.
Graham, L., & Messier Jr, W. F. (2006). Audit risk and materiality in conducting an audit. Journal of Accountancy, 201(5), 116.
Hassan, M. Y., & Naser, K. (2013). Determinants of audit fees: Evidence from an emerging economy. International Business Research, 6(8), 13-25.
Hay, D. C., Knechel, W. R., & Wong, N. (2006). Audit fees: A Meta?analysis of the effect of supply and demand attributes. Contemporary accounting research, 23(1), 141-191.
Hentati, E., & Jilani, F. (2013). The determinants of non-audit fees in French firms. Management Science Letters, 3(6), 1773-1782.
Joshi, P. L., & Al?Bastaki, H. (2000). Determinants of audit fees: evidence from the companies listed in Bahrain. International journal of auditing, 4(2), 129-138.
Kikhia, H. Y. (2014). Determinants of Audit Fees: Evidence from Jordan. Accounting and Finance Research, 4(1), 42.
Kwong, J. (2011). The relationship between industry specialization and the audit fee premium in New Zealand. International Journal of Business and Social Science, 2(4).
Naser, A. A. K., Al-Mutairi, A., & Rana Nuseibeh, K. (2013). Can substitution and signaling theories explain the relationship between external audit fees and the effectiveness of internal corporate governance?. Global Journal of Management and Business Research, 13(5)
Paino, P. H., & Tahir, W. M. M. W. (2012, September). Financial reporting risk assessment and audit pricing. In Business, Engineering and Industrial Applications (ISBEIA), 2012 IEEE Symposium on (pp. 85-89). IEEE.
Sandra, W. M. H., & Patrick, P. H. N. (1996). The determinants of audit fees in Hong Kong: an empirical study. Asian Review of Accounting, 4 (2), 32-50.
Shafie, R., Che Ahmad, A., & Md Ali, A. (2007). The relationship between non-audit service fees and audit fees in the banking sector in Malaysia. International Journal of Management Studies (IJMS), 14(1), 61-87.
Siddiqui, J., Zaman, M., & Khan, A. (2013). Do Big-Four affiliates earn audit fee premiums in emerging markets?. Advances in Accounting, 29(2), 332-342.
Simon, D. T., & Taylor, M. H. (2002). A survey of audit pricing in Ireland. International Journal of Auditing, 6(1), 3-12.
Simunic, D. A. (1980). The pricing of audit services: Theory and evidence. Journal of accounting research, 161-190.
Sundgren, S., & Svanström, T. (2013). Audit office size, audit quality and audit pricing: evidence from small-and medium-sized enterprises. Accounting and Business Research, 43(1), 31-55.
Vermeer, T. E., Raghunandan, K., & Forgione, D. A. (2009). Audit fees at US non-profit organizations. Auditing: A Journal of Practice & Theory, 28(2), 289-303.
Watts, R. L., & Zimmerman, J. L. (1986). Positive accounting theory. Prentice-Hall Inc.
XU, J. Z. Y. (2005). The Determinants of Audit Fees: Evidence From the China's Listed Companies in 2001—2003 [J]. China Accounting Review, 1(006).
Musah, A. (2017). Determinants of Audit fees in a Developing Economy: Evidence from Ghana. International Journal of Academic Research in Business and Social Sciences, 7(11), 657-670.
Copyright: © 2018 The Author(s)
Published by Human Resource Management Academic Research Society (www.hrmars.com)
This article is published under the Creative Commons Attribution (CC BY 4.0) license. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this license may be seen at: http://creativecommons.org/licences/by/4.0/legalcode
