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Relation between external audit fees, audit committee characteristics and internal audit

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  • Jenny Goodwin-Stewart
  • Pamela Kent
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    Abstract

    This study examines whether the existence of an audit committee, audit committee characteristics and the use of internal audit are associated with higher external audit fees. Higher audit fees imply increased audit testing and higher audit quality. We find that the existence of an audit committee, more frequent committee meetings and increased use of internal audit are related to higher audit fees. The expertise of audit committee members is associated with higher audit fees when meeting frequency and independence are low. These findings are consistent with an increased demand for higher quality auditing by audit committees, and by firms that make greater use of internal audit. Copyright (c) The Authors Journal compilation (c) 2006 AFAANZ.

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    Bibliographic Info

    Article provided by Accounting and Finance Association of Australia and New Zealand in its journal Accounting and Finance.

    Volume (Year): 46 (2006)
    Issue (Month): 3 ()
    Pages: 387-404

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    Handle: RePEc:bla:acctfi:v:46:y:2006:i:3:p:387-404

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    Cited by:
    1. Harjinder Singh & Rick Newby, 2010. "Internal audit and audit fees: further evidence," Managerial Auditing Journal, Emerald Group Publishing, vol. 25(4), pages 309-327, May.
    2. Akeel M. Lary & Dennis W. Taylor, 2012. "Governance characteristics and role effectiveness of audit committees," Managerial Auditing Journal, Emerald Group Publishing, vol. 27(4), pages 336-354, May.
    3. Azhaar Lajmi & Marjène Gana, 2011. "Structure de Propriété et Qualité de l'Audit Externe : Cas des Entreprises Belges Cotées," Post-Print hal-00650542, HAL.
    4. Mehdi Nekhili & Wafa Masmoudi & Dhikra Chebbi Nehkili, 2009. "Choix de l’auditeur externe, honoraires d’audit et gouvernance des entreprises françaises," Working Papers CREGO 1090501, Université de Bourgogne - CREGO EA7317 Centre de recherches en gestion des organisations.
    5. Laura Sierra García & Emiliano Ruiz Barbadillo & Manuel Orta Pérez, 2012. "Audit committee and internal audit and the quality of earnings: empirical evidence from Spanish companies," Journal of Management and Governance, Springer, vol. 16(2), pages 305-331, May.
    6. C. Piot & L. Kermiche, 2009. "A quoi servent les comités d'audit ? Un regard sur la recherche empirique," Post-Print halshs-00537952, HAL.
    7. Effiezal Aswadi Abdul Wahab & Mazlina Mat Zain & Kieran James & Hasnah Haron, 2009. "Institutional investors, political connection and audit quality in Malaysia," Accounting Research Journal, Emerald Group Publishing, vol. 22(2), pages 167-195, September.
    8. Jesus Sáenz González & Emma García-Meca, 2014. "Does Corporate Governance Influence Earnings Management in Latin American Markets?," Journal of Business Ethics, Springer, vol. 121(3), pages 419-440, May.
    9. Siti Subaryani Binti Zainol & M. Krishna Moorthy & Tengku Rahimah Binti Tengku Arifin, 2012. "Determinants of Non-Audit Services in Malaysia: A Theoretical Model," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 2(3), pages 97-111, July.
    10. Ismail Adelopo & Kumba Jallow & Peter Scott, 2012. "Multiple large ownership structure, audit committee activity and audit fees: Evidence from the UK," Journal of Applied Accounting Research, Emerald Group Publishing, vol. 13(2), pages 100-121.
    11. Effiezal Aswadi Abdul Wahab & Mazlina Mat Zain & Kieran James, 2011. "Political connections, corporate governance and audit fees in Malaysia," Managerial Auditing Journal, Emerald Group Publishing, vol. 26(5), pages 393-418, May.
    12. Husam Aldamen & Keith Duncan, 2012. "Corporate governance and access to interest bearing debt," Journal of Financial Reporting and Accounting, Emerald Group Publishing, vol. 10(2), pages 140-152.
    13. Mishiel Said Suwaidan & Amer Qasim, 2010. "External auditors' reliance on internal auditors and its impact on audit fees: An empirical investigation," Managerial Auditing Journal, Emerald Group Publishing, vol. 25(6), pages 509-525, June.
    14. Mary Jane Lenard & Karin A. Petruska & Pervaiz Alam & Bing Yu, 2012. "Indicators of audit fees and fraud classification: impact of SOX," Managerial Auditing Journal, Emerald Group Publishing, vol. 27(5), pages 500-525, July.
    15. Madan Lal Bhasin, 2012. "Improving Corporate Governance. The role of Audit Committee Disclosures by Indian Corporations," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 2(1), pages 128-149, January.

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