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Are auditors’ Justification of Assessments relevant to the study of audit fee? Evidence from France

Author

Listed:
  • Jacques Moreau

    (Institut d'Administration des Entreprises (IAE) - Tours)

  • Philippe Touron

    (UP1 UFR06 - Université Paris 1 Panthéon-Sorbonne - UFR Gestion & économie d'entreprise - UP1 - Université Paris 1 Panthéon-Sorbonne, PRISM Sorbonne - Pôle de recherche interdisciplinaire en sciences du management - UP1 - Université Paris 1 Panthéon-Sorbonne)

Abstract

Few studies address the relationship between audit fees and auditors' comments included in enhanced audit reports. Auditors' reports are expected to convey information about audit effort and risk. This study examines whether pre-ISA 701 Justifications of Assessments (JOA – which serve the same purpose as Key Audit Matters – KAM – as introduced by ISA 701 and Critical Audit Matters – CAM – in the United States) is associated with audit fees in the French context over the period 2003-2017. We find evidence of the usefulness of JOA to explain/understand audit fees. The quantity of JOA reported by the auditors aggregates many qualitative aspects of their content regarding the determination of audit fees. Our results contribute to the research on the usefulness of the audit report and indicate that JOA can help users understand the effort and risk perceived by the auditor, which could reduce both the information gap and the expectation gap.

Suggested Citation

  • Jacques Moreau & Philippe Touron, 2019. "Are auditors’ Justification of Assessments relevant to the study of audit fee? Evidence from France," Post-Print hal-04043249, HAL.
    • Handle: RePEc:hal:journl:hal-04043249
    as

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