Dissecting the price of assurance: a case study about audit fee determination in a Duch Big 4 audit firm
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2018-07-04
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en
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The topic of audit fee determination and what factors influence the height of audit fees have been widely discussed in quantitative research. However, the results of the previous studies show that the different factors are not always consistent. On top of this, the measures used in quantitative research are often proxies of the real constructs used in practice. Therefore, this study examines how audit fees are determined in practice and what considerations the auditor actually takes into account. This is done by using the case study method at a Big 4 audit firm in the Netherlands. The results of this study indicate that there are three main phases in which audit fees are being determined and these are: the construction of the technical budget, negotiations with the client about the commercial budget and finally the additional work phase during the audit process. Each of these phases has its own considerations that come along with it. The results of this study provide input for further discussions into audit fee determination by looking at considerations that auditors make in practice.Key words: audit fee determination, technical budget, commercial budget, additional work.
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Faculteit der Managementwetenschappen