초도감사 보수할인이 감사품질에 미치는 영향|RISS 상세보기

다국어 초록 (Multilingual Abstract)

In Korea, listed companies have been required to retain the same auditor for three consecutive years under the mandatory auditor retention requirement as a means of increasing auditor independence since 1998. However, there has been growing concern that this requirement causes more serious price competition among auditors. In other words, auditors will compete among themselves in order to win over the initial year audit engagement by signi- ficantly cutting down the audit fee, since a guaranteed three consecutive years of audit engagement can be obtained under the auditor retention requirement. This price-cutting may cause the auditors to spend insufficient amount of hours on the audit engagement, which could threaten the quality of the audit. This study examines the impact of the initial audit fee discount on audit quality under the current mandatory auditor retention requirement for listed companies. The relation between the initial audit engagement, the initial audit fee discount, and the audit quality has been analyzed for listed companies covering the period from 1999 to 2003 based on the audit fee model and discretionary accruals; the companies offering an audit fee discount are defined as those having actual audit fees of at least 20% lower than the estimates calculated based on the audit fee model, and the audit quality was measured using discretionary accruals. The analysis revealed two main findings: first, the initial audit engagement provided a lower audit quality compared to the continuing audit even when the audit fee discount factor was disregarded; second, discretionary accruals of companies under initial audit with discounted fees were higher than that of companies with no discount, and even higher than that of companies in general. In short, the audit quality of the initial audit engagement is generally low and that of companies giving the initial audit fee discount is even lower; this could lead to an increase in the possibility of audit mal-practice. For many years, practitioners and regulators have been concerned about the possibility of the initial audit fee discount reducing the audit quality, and the findings from this study are consistent with the argument that audit quality may be compromised if the audit fee is not sufficient. Therefore, it is recommended that practitioners and regulators take adequate policies in preventing the audit quality from being impaired as a result of the initial audit fee discount.

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참고문헌 (Reference)

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