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


  • The authors acknowledge the helpful comments of Peter Clarkson, Allen Craswell, Colin Ferguson, Jere Francis, Philip Gray, Ferdinand Gul, Marion Hutchinson and Jilnaught Wong.

  • doi: 10.1111/j.1467-629X.2006.00174.x


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.