This study investigates the factors affecting the level of audit fees paid by companies to their auditors. Firstly, all the likely factors thought to be affecting the level of audit fees were identified through a literature survey. These factors were classified into three groups i.e., size, complexity, and others. The relative importance of these factors was determined empirically and statistically. The empirical study was undertaken by mailing two questionnaires to samples of 100 companies, and 100 audit firms. Preliminary interviews were carried out in order to identify if the most important factors collected through the literature should be considered suitable for further inclusion in the final questionnaire. The questionnaires were not used to collect data or to quantify the subjective factors. They were used to assess the degree to which the factors previously identified were important determinants of the audit fee, and whether other determinants should also be considered. The data for the statistical analysis was obtained from published data i.e., Data Stream, Companies' Annual Reports, and Who Owns Whom. In carrying out the statistical analysis, Multiple Regression arid Principal Component Techniques were used to assess the magnitude of the association between the size and complexity factors and audit fees. An audit fee regression model was developed which explains 90Y. of the variation in audit fees of the largest 65 manufacturing companies in the U.K. on the basis of their size and complexity. The results of both the empirical study, and the statistical analysis revealed that the company size (in terms of debtors, stocks work in progress, turnover, creditors, and total employment costs), and its complexity (in terms of number of subsidiaries, and number of countries in which the company operates) are the major objective determinants of audit fees. The empirical study also revealed that the quality of the company's internal control system, competition in the audit market, and the risk involved in the audit work are the major subjective determinants of audit fees. In addition, the statistical analysis revealed that the factors debtors, number of subsidiaries, and total employment costs are the most significant predictors of audit fees, and the audit fee model which involves these three factors explains 92Y. of the variation in audit fees.

Sammanfattning Studien undersöker hur revisionsansträngningen hos företag på Nasdaq OMX Nordic Stockholms listor, Mid cap och Small cap, påverkas under hög – respektive lågkonjunktur genom att undersöka faktorerna: Komplexiteten hos företag Risken hos företag  Revisorns erfarenhet   Studien undersöker revisionsansträngningen genom revisionsarvodet under 2007-2009. Multipla linjära regressioner har används för att nå resultatet. Resultatet av studien visade att för samtliga tre undersökningsår var komplexitet signifikant, revisorerna ansåg att utländska dotterföretag var en faktor som påverkade revisionsansträngningen hos företag på Small – och Mid Cap oavsett om Sverige befann sig i en hög- eller lågkonjunktur. Risken hos företag påverkar revisionsansträngningen i hög – respektive lågkonjunktur. Kundfodringar i relation till totala tillgångar ökade revisionsansträngningen samtliga undersökningsår och ett negativt resultat medförde en ökad revisionsansträngning i hög – och lågkonjunktur. Revisorns erfarenhet påverkade inte revisionsarvodet i varken hög – eller lågkonjunktur. Av de undersökta variablerna visade resultatet att revisorn granskar samma faktorer oberoende av hög- och lågkonjunktur och att ansträngningen har ökat mellan åren och det kan beror på konjunkturen men också av andra faktorer. Eftersom studien är kvantitativ kan vi inte yttra oss om varför revisorer agerar på ett visst sätt, och vi ser därför att ytterligare forskning behövs för att undersöka revisorernas beteende samt ytterligare studier kring hur svenska dotterföretag påverkar revisionsansträngningen, då resultatet går emot vad tidigare forskning visat.   Studien har bidragit med att ge en indikation på att revisionsansträngningen är av högre kvalitet när Sverige befinner sig i hög – som lågkonjunktur.

Extraordinary high fees received by the auditors from their clients during the recent financial crisis have attracted public attention. However, reasons for high fees for audit service are obscure. Many studies have proved the importance of the client size, complexity, risks and the auditor status in determination of audit fees. Another determinant, the non-audit fee, has been intensively debated in the literature. The reason for this is that the audit and non-audit fees are not correlated in the way many researchers have expected. Namely, the vast majority of research has reported a positive association between two services. Many explanations for the phenomenon have been set forward. However, real reasons for such association remain unclear and the consensus between researchers is lacking. The study of the correlation between the two types of expenditures in the Swedish audit environment during a long time period may shed some light on this complex phenomenon. Some evidence suggest that an economic downturn can affect the relationship between audit and non-audit fees and their ratios. Therefore, the recent financial crisis provides an excellent opportunity to examine a possible relationship. Using the data from Middle Cap and Small Cap Swedish companies, this study investigates the relationship between audit and non-audit fees and their ratios during three periods of different economic conditions: favorable 2006 -2007, economic downturn 2008-2009 and post crisis period 2010-2011. In this study I tested a number of hypotheses. Firstly, I investigated the suggestion that the relationship between audit and non-audit fees in Sweden, like in many other countries, is positive. Secondly, I tested the hypothesis that economic fluctuations affect this relationship. Thirdly, I explored my prediction that the economic downturn influences the ratios of audit and non-audit fees. I have shown that the relationship between audit and non-audit services is positive during the whole investigated period. According to these results, the relationship is not affected by different economic conditions. Furthermore, I have found out that the financial crisis affected the audit and non-audit fee ratios. The ratio of the audit fee increased during the crisis and continued to increase during the post-crisis period. The ratio of non-audit fee decreased in the same proportion.

美國在2001年10月爆發了安達信(Anderson)-安隆（Enron）案，對整個企業界造成極大的衝擊，提供非審計服務究竟是否會影響財務報表品質引起廣泛討論。 因證期會於民國九十二年一月三十日新修正「證券發行人財務報告編製準則」第二十二條，使得資訊相對過往較易取得，雖因研究限制使得樣本不具良好代表性，但在某種程度上仍能提供一定的參考價值，故本研究擬仿效Frankel et al. (2002)之研究，探討在台灣會計師提供非審計服務及審計服務是否會對財務報表品質造成影響；本研究以Threshold（公司實際每股盈餘-分析師預測每股盈餘）及裁量性應計(discretionary accrual)做為財務報表品質之代理變數。 本研究發現上市公司並未因審計公費及非審計公費較高而有進行盈餘管理，但上櫃公司卻會因審計公費及非審計公費較高而進行盈餘管理。 / The collapse of Enron and the conflict of interest surrounding their auditors Arthur Anderson, particularly the effect non-audit fees on the quality of the audited financial statements, have resulted in numerous changes to the regulations effectively limiting the level of non-audit service accounting firms can offer to their clients. The Taiwan SEC enacted new regulations forcing public companies that meet certain criteria, to disclose the level of audit and non-audit fees paid to accounting firms. This resulted in the availability of information that was previously unobtainable. However, concerns still remain, as research is restricted because the number of companies reporting represents a small percentage of the companies in Taiwan. Nonetheless, this research hopes to use the data from the reporting companies to examine the relationship between the quality of the financial statement and the level of fees paid to accounting firms. We intent to use an adaptation of the Frankel et al. (2002) model to study the companies in Taiwan. Using data provided by the companies we intend to demonstrate a causal relationship between the level of non-audit fees and the quality of the accounting statement. We used Threshold and discretionary accrual to represent the quality of the financial statement. We found that for the companies listed on the TAIEX there was no relationship between the quality of the financial statements and the level of audit and non-audit fees; however for companies trading on the OTC market we found there was a causal relationship.

Introduction Since 2009 it has been legislated that Swedish listed public companies should establish an audit committee. The law and the code gives the board as a whole the possibility to operate the function of the committee. Former research of audit committee’s effect on audit fee have been made in several countries with various results. In this study, we aim to analyze how audit committees in companies listed on the Stockholm stock exchange can affect the audit fee. Purpose The purpose of this study is to explain how the existence of audit committees and its characteristics affect the external audit fees of companies listed on the Stockholm stock exchange. Method This quantitative study has a cross section design and a deductive approach. By studying documents, the annual reports of the companies listed on the Stockholm stock exchange, data will be collected and then analyzed in regression models. We have operationalized our variables according to former studies and research. The hypotheses have been written on the basis of former research and two perspectives of demand and risk. Conclusion The results in this study show that the existence of audit committees have a positive relationship with audit fee. Also the activeness of the committee has a positive influence on audit fee. The results can be explained by the audit committee, especially active committees, on one hand lowers the overall audit risk but on the other increases the demand of higher audit quality, which outweighs the lowered audit risk. / Introduktion Sedan 2009 har det varit lagstiftat att svensknoterade publika bolag ska inrätta revisionsutskott. Lagtext och Koden ger dock möjlighet att låta styrelsen som helhet sköta utskottets uppgifter. Tidigare studier har genomförts i flertalet länder, där resultaten av revisionsutskottens påverkan på revisionskostnaden har varierat. Vi vill i denna studie undersöka hur revisionsutskott påverkar revisionskostnaden i svensknoterade bolag. Syfte Syftet med vår studie är att förklara hur revisionsutskottens förekomst och karaktär påverkar revisionskostnaden för bolag noterade på Stockholmsbörsen. Metod Denna kvantitativa studie har en tvärsnittsdesign och en deduktiv ansats. Genom dokumentstudier har data i årsredovisningar från bolag noterade på Stockholmsbörsen samlats in för att sedan analyseras i regressionsmodeller. Operationalisering har i så stor utsträckning som möjligt gjorts i enighet med tidigare forskning. Vidare har hypoteser formulerats utifrån tidigare forskning med utgångspunkt ur ett efterfråge- och riskperspektiv. Slutsats Våra resultat visar att förekomsten av revisionsutskott har positivt samband med revisionskostnader. Även revisionsutskottets aktivitet har visat sig ha positiv påverkan på revisionskostnader. Resultaten förklaras av att revisionsutskott, och särskilt aktiva sådana, visserligen sänker den allmänna revisionsrisken men att en ökad efterfrågan av högre revisionskvalitét överväger den minskade revisionsrisken.

The aim of this study is to test the audit fee determinants for companies listed on Nasdaq OMX Stockholm Stock Exchange and to examine whether the audit fee determinants diverge for ownership structures. By testing the audit fee determinants in a Swedish setting the study contributes to the research body in two ways; by testing a previously sparsely researched setting and examining the monitoring need for different ownership structures. The results indicate that audit fees are explained to a large extent by accounting complexities, business complexities and assurance.  The results also suggest that ownership structure does not have a large effect on the monitoring need.  Altogether the results provide further evidence on audit fee determinants whilst adding initial insight into the area of audit fee determinants for ownership structures.

Introduktion Den interna revisorn antas ha bättre insyn i företaget än den externa. Enligt agentteori maximerar internrevisorn sin egen nytta, vilket ifrågasätter dennes oberoende. Dagens forskning är delad i två perspektiv där den interna revisionen och de externa revisionskostnaderna har ett positivt eller negativt samband. Den rådande trenden med ökad intern revision och kontroll i samband med den nya kontext som skapats genom de under 2000-talet införda regelverken motiverar och aktualiserar studien. Syfte Syftet med denna studie är att förklara hur den interna revisionen påverkar kostnaden för den externa revisionen i svenska noterade bolag. Metod Studien har en kvantitativ forskningsstrategi och en deduktiv forskningsansats. Genom dokumentstudier har data för svenska noterade företag samlats in och med hjälp av en regressionsmodell analyserats. Operationalisering har skett i enlighet med tidigare forskning och internrevisionens förekomst har mätts med en dummyvariabel. Slutsats Studiens resultat visar att internrevisionens förekomst har ett starkt signifikant positivt samband med kostnaden för den externa revisionen. Studien finner att företag med internrevision får högre revisionskostnader, men att de bakomliggande orsakerna kan vara krav på ökade kontroller. Tidigare forskning bekräftar resonemanget och att efterfrågan på ökad kontroll leder till ökade investeringar i både den interna och externa revisionen. Studiens resultat implicerar att internrevisionen används av företagsledningen för att signalera förtroende till ägarna. / Introduction The internal auditor is assumed to have a greater insight in the firm than the external auditor. Agency theory tells us that the internal auditor maximizes his own utility, which questions his independence. The current research is divided into two perspectives where the internal audit and the cost of the external audit has a positive or a negative relationship. The prevailing trend of increased internal audit and control together with the new context created in the 21th century with introduced regulations motivates and actualizes this study. Purpose The purpose of this study is to explain how the internal audit impacts the cost of the external audit in swedish listed firms. Method This study has a quantitative research strategy and a deductive research approach. Data from swedish listed firms has been collected through studies of documents and analyzed with a linear regression. Operationalization has been made in accordance with previous research and the presence of internal audit has been measured with a dummy variable. Conclusion The result of this study shows that the presence of internal audit has a strongly significant positive relationship with the cost of the external audit. The study finds that firms with internal audit increase their audit costs, but that underlying reasons might be demand for greater control. Previous research confirms the argument and that demand for greater control leads to greater investments in both internal and external audit. The result of this study implies that internal audit is used by management to signal trust to the shareholders.

In my dissertation, I examine the role of the audit committee chair in the financial reporting process and test if the change in audit committee chair is associated with changes in audit fees, audit report lag, and audit quality. Motivation for this dissertation comes from the increased attention paid by legislators and regulators in recent years on the role of the audit committee in the financial reporting process. While prior studies have examined diverse issues related to the composition of the audit committee, no prior study has examined the role of the audit committee chair on the oversight of financial reporting, even though the chair of the committee has significant control over the functioning of the committee. In the first essay of my dissertation, I show that audit fees are higher in firms that have a change in the audit committee chair. In the second essay, I examine the association between changes in the audit committee chair and audit report lag. In a changes regression, I find that the change in audit committee is associated with higher audit report lag. The third essay examines the association between changes in audit committee chair and two different measures of audit quality: restatements and abnormal accruals. There is no evidence in support of the argument that changes in audit committee chair is associated with higher quality financial reporting. Overall, the results suggest that the change in audit committee chair has an important impact on the financial reporting process of public companies.

為降低資訊不對稱下企業管理階層與資金提供者間之代理問題，公司須設計有效之治理機制以降低代理成本，如聘任外部董監、設置審計委員會及聘任會計師查核等。而當董監事所具備的獨立性及專業性越高，基於維護專家信譽及降低訴訟成本的考量下，將需要會計師投入較多的查核人力及時間，以降低資訊不對稱現象，並減少會計師與公司管理階層間經濟依存度，以獲得較高品質的審計服務。然目前公司治理議題多著重於公司內部監理機制與公司經營績效間的關係，較少觸及內部董監事會監督功能對外部會計師監督功能的影響，是以本研究嘗試以公司治理的角度出發，探討台灣上市、上櫃及興櫃公司董監事獨立性與專業性對於審計公費以及非審計公費之影響。 本研究實證結果發現，目前我國上市櫃及興櫃公司董監事獨立性對於審計公費及非審計公費尚未有統計上顯著之影響，唯董監事兼任其他公司董監事職位數與非審計公費間存有負向關係。不同於 Carcello et al. (2000)的結論，本研究發現台灣公司董監事會之專業性對審計公費及非審計公費之影響較董監事獨立性大，其原因可能是公司治理在台灣始見萌芽，社會大眾對公司治理及董監事功能之概念不深，一方面股東會欠缺聘任獨立董監之誘因，一般公司設置獨立董監多半僅為符合表面規定，所選出之獨立董監亦未必與管理階層維持實質獨立，而無法收實質監督之效；一方面董監事對其職權之行使並未擴及會計師聘任之實質決策，而多僅接受管理當局推薦，獨立董監亦無法對審計及非審計公費進行審議。反是董監事平均兼任其他公司董監職位數越多，代表其所享之專家信譽越高，會為維護自身信譽且降低訴訟風險，藉由限制管理階層向會計師所購買的非審計服務種類及金額，以降低會計師與管理階層間的經濟依存度。 / To reduce the agency problem between management and capital suppliers, the business should design an effective corporate structure to reduce agency cost, including hiring outside board members and/or the establishment of an audit committee. The board members with higher independence and expertise will ask the auditors to put in more audit time to reduce information asymmetry. And they will expect to lessen the auditor’s economic dependency on the management by restricting non-audit services the company will purchase from the independent auditor firm. Most researches recently focus on the relation between characteristic of the board and business operation results. This research attempted to examine the relation between board characteristics and audit/non-audit fees paid to the independent auditors. This study found there’s no significant relation between board independence and audit fees or non-audit fees, but a negative relation existed between the board expertise and non-audit fees. Opposite to the conclusion of Carcello et al. (2000), this result indicated that the effect of board expertise on fees is greater than that of board independence. It could be due to the initial development of corporate governance in Taiwan. Most companies hire outside board members and set up an audit committee just to meet the regulation stipulated by law. On the other hand, the greater expertise a board processes, the less non-audit fee it will pay to the auditor in order to reduce the economic dependency of the auditor on the management.

Auditing has an important role in the corporate governance process and is essential in ensuring confidence in the reliability of financial information. It is important to understand the reasons why, given the costs involved, companies change their auditor and choose a particular level of audit assurance. To date, however, only a limited number of studies on auditor choice issues are available, especially in the UK setting. Further, since the downfall of Andersen, the audit market environment has changed significantly, creating a new audit environment to be researched. In light of these recent developments, the objectives of this thesis are to address both concentration and auditor choice issues. It is divided into two separate but interrelated parts. The first part of this thesis provides evidence on audit market concentration in the UK domestic listed company market from 1998 to 2003. The effect of Andersen’s demise on both audit market concentration and audit fees is examined. Using four different size measures (number of audits, audit fees, clients’ total assets and sales), three measures of concentration are calculated. Results show that the UK audit market has now clearly surpassed the tight oligopoly threshold and, despite auditing significantly fewer clients in 2003 than in 1998, the B5/4 managed to increase their fee dominance. In particular, the decline in B5/4 ‘number of clients’ market share was mainly due to their lower share of the newly-listed companies audit market. On the other hand, the slight increase in B5/4 audit fee market share was due to the net impact of leavers concentrating the B5/4 share and joiners diluting it. Voluntary switches to/from the B5/4 had a relatively small impact on B5/4 market share for both measures. Following Andersen’s acquisition by Deloitte & Touche, market levels of audit fee and audit fee rate (audit fee scaled by total assets) have increased markedly, suggesting that more audit effort is being expended as a way to restore confidence about audit quality after the damage caused by Andersen’s alleged misconduct. The acquisition has also contributed to a further increase in ‘audit fee’ market concentration for the 4-firm concentration ratio (CR4) and in the overall Hirschman-Herfindahl Index measure. Although, Deloitte & Touche gained significant market share in terms of both audit fees and number of audits through its acquisition of Andersen, it is PricewaterhouseCoopers that continues to hold the largest market share. Deloitte & Touche retained 93 former Andersen clients (74%), 21 (17%) moved to another B5/4 auditor and 11 (9%) chose a non-B5/4 firm. While former Andersen clients paid higher audit fees, in aggregate, the increase was, perhaps surprisingly, less than for the market as a whole. At the industry level, the B4 firms dominated all sectors, the highest non-B5/4 market share in any industry being just 8%. In 2003, PricewaterhouseCoopers was the leader in 18 out of 34 sectors. The second part of the thesis is divided into two separate studies – auditor change determinants and new auditor selection determinants. These studies use a sample of non financial auditor change companies to test logistic regression models of the determinants of auditor change and new auditor selection. The determinant variables include auditee, auditor and audit characteristics. This part also examines the sensitivity of results to alternative functional forms of the basic model specification. Two definitions of auditor quality – brand name auditor and specialism, are employed. Internal governance issues such as audit committee independence, the duality of chairman/CEO as well as the size/quality of the incumbent auditor were found to be significant determinants of auditor change. Expected future growth in the company, rather than past growth, and audit fee reduction were positively related to audit change probability. Result also suggests that companies changed auditor to improve the perception of auditor independence. By contrast, in the new auditor selection models, corporate governance variables did not appear to be important in determining a different quality (brand-name) auditor. Only the chairman/CEO duality variable was weakly and negatively significant, suggesting that duality is associated with a change to a lower quality auditor. Growing companies are more likely to change to a brand name auditor, consistent with the inability of smaller firms to provide services across an international market. Contrary to agency theory predictions, the results show that a company experiencing increased leverage is less likely to choose a B5/4 auditor, suggesting that B5/4 auditors are being selective in avoiding risky clients. Higher audit fees are paid to new auditors by companies that changed from non-B5/4 to B5/4, reflecting a B5/4 fee premium. However, the higher NAS fee result is contrary to initial expectations. Typically, far fewer variables were significant in the models with audit quality proxied by industry specialism. For the specialism models based on audit fee market share, there is counter-intuitive evidence that a company with a large number of subsidiaries is less likely to move to a specialist auditor from a non-specialist. New specialist auditors were more likely to be preferred when a company experienced an increase in current accruals or a reduction in leverage. In general, the results for these models were less strong and were dependent upon the specialist definition adopted. Finally, the thesis provides evidence that the choice of time variant model (ex-ante, contemporaneous or ex-post) made no significant difference to the overall results. The one exception concerns the ‘growth’ variable, where companies are found to change auditor in anticipation of future growth, rather than as a response to past growth. Further, the use of alternative proxy variables does not greatly influence the regression results. One important exception to this general observation concerns the brand name proxy. When brand name was defined as tier12 (to include Grant Thornton and BDO) the significance level was improved in all models. This suggests that, to some degree, Grant Thornton and BDO are viewed as quality service providers closer in quality to B5/4 than to other smaller audit firms.