The Determinants of Audit Fees. Further Evidence From the UK Charity Sector

Center for International Business Studies (CIBS) Working Paper No. 2-10

42 Pages Posted: 26 Jul 2010 Last revised: 18 Feb 2011

See all articles by Emiliano Cantoni

Emiliano Cantoni

University of Bologna - Department of Management

Kenneth Edgar D'Silva

London South Bank University - Centre for Research in Accounting

Martin Isaacs

affiliation not provided to SSRN

Date Written: February 11, 2011

Abstract

Given the lack of literature and the ever growing relevance of charities, the present paper investigates the determinants of audit fees in the UK charity sector. It proposes a theoretical framework to determine the audit fee, which is empirically tested on a dataset of 119 “largest” charities. The paper also investigates the presence of a fee premium associated with (now) Big4 audit firms and expertise in charity auditing, and compares the results with those of a leading study in the UK context (Beattie et al., 2001). Our findings basically confirm those of Beattie et al. (2001). The evidence shows that size, risk, and fees for Non-Audit Services (NAS) are the main determinants of audit fee determination, while, contrary to research in the private sector, the organisational complexity of the charity does not seem to have significant influence on audit fees. The results also show a positive association between audit fees and NAS fees, the presence of an audit fee premium between Big4 and non-Big4 auditors, as well as significant higher remuneration for the auditors’ expertise.

Keywords: Audit Fee Determinants, Charity Sector, Audit Fee Models, Audit Fee Premium

JEL Classification: M41

Suggested Citation

Cantoni, Emiliano and D'Silva, Kenneth Edgar and Isaacs, Martin, The Determinants of Audit Fees. Further Evidence From the UK Charity Sector (February 11, 2011). Center for International Business Studies (CIBS) Working Paper No. 2-10. Available at SSRN: https://ssrn.com/abstract=1648830 or http://dx.doi.org/10.2139/ssrn.1648830

Emiliano Cantoni (Contact Author)

University of Bologna - Department of Management ( email )

Piazza Scaravilli 1
Bologna, Bologna 40126
Italy
+390543374640 (Phone)

Kenneth Edgar D'Silva

London South Bank University - Centre for Research in Accounting ( email )

103 Borough Road
London, SE1 0AA
United Kingdom

Martin Isaacs

affiliation not provided to SSRN ( email )

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