Financial Crisis Impacts on Audit Fees

Abstract

This research is designed to understand the impact the financial crisis has had on audit fees (the amount payable to auditors for an audit). We sought to determine whether increased financial risk drove increased audit risk and an increase in audit fees. Previous fee research has not been updated since 2005. Our hypotheses for the result are: 1. The audit fees for financial service companies have increased since 2006 due to portfolio valuation and going concern issues. 2. The audit fees for non-financial service companies have decreased resulting from economic pressures experienced by firms’ audit clients that translate to audit fee reductions. 3. Audit fees at the largest CPA firms have been flat or declined since 2007.