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

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  • Jenny Goodwin-Stewart
  • Pamela Kent

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.

Suggested Citation

  • Jenny Goodwin-Stewart & Pamela Kent, 2006. "Relation between external audit fees, audit committee characteristics and internal audit," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 46(3), pages 387-404.
  • Handle: RePEc:bla:acctfi:v:46:y:2006:i:3:p:387-404
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    Cited by:

    1. Lois Munro & Sherrena Buckby, 2008. "Audit Committee Regulation in Australia: How Far Have We Come?," Australian Accounting Review, CPA Australia, vol. 18(4), pages 310-323, December.
    2. 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, May.
    3. Melinda Timea FÜLÖP & Mirela-Oana PINTEA, 2014. "Effects Of The New Regulation And Corporate Governance Of The Audit Profession," SEA - Practical Application of Science, Fundația Română pentru Inteligența Afacerii, Editorial Department, issue 4, pages 545-554, July.
    4. Azhaar Lajmi & Marjène Gana, 2011. "Structure de Propriété et Qualité de l'Audit Externe : Cas des Entreprises Belges Cotées," Post-Print hal-00650542, HAL.
    5. 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, September.
    6. 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.
    7. Cristina Boţa-Avram, 2012. "Perceptions Over the Audit Committee Practices in the Context of Corporate Governance: Evidence From Romania," Journal of Knowledge Management, Economics and Information Technology, ScientificPapers.org, vol. 2(5), pages 1-11, October.
    8. 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 & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 16(2), pages 305-331, May.
    9. repec:kap:jmgtgv:v:21:y:2017:i:2:d:10.1007_s10997-016-9342-8 is not listed on IDEAS
    10. Harjinder Singh & Rick Newby, 2010. "Internal audit and audit fees: further evidence," Managerial Auditing Journal, Emerald Group Publishing, vol. 25(4), pages 309-327, April.
    11. 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, April.
    12. repec:ebl:ecbull:eb-17-00153 is not listed on IDEAS
    13. 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.
    14. Karen Benson & Peter M Clarkson & Tom Smith & Irene Tutticci, 2015. "A review of accounting research in the Asia Pacific region," Australian Journal of Management, Australian School of Business, vol. 40(1), pages 36-88, February.
    15. C. Piot & L. Kermiche, 2009. "A quoi servent les comités d'audit ? Un regard sur la recherche empirique," Post-Print halshs-00537952, HAL.
    16. 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.
    17. 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.
    18. Etienne Redor, 2017. "Board Turnover, Director Characteristics and Audit Fees," Post-Print hal-01624979, HAL.
    19. 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.
    20. 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.
    21. 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.
    22. Salau ABDULMALIK O. & Ayoib CHE AHMAD, 2016. "Boardroom diversity and audit fees: director ethnicity, independence and nationality," The Audit Financiar journal, Chamber of Financial Auditors of Romania, vol. 14(136), pages 413-413, Aprilie.
    23. 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, October.
    24. mamatzakis, em, 2014. "The effect of corporate governance on the performance of US investment banks," MPRA Paper 60198, University Library of Munich, Germany.

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