The authors acknowledge the helpful comments of Peter Clarkson, Allen Craswell, Colin Ferguson, Jere Francis, Philip Gray, Ferdinand Gul, Marion Hutchinson and Jilnaught Wong.
Relation between external audit fees, audit committee characteristics and internal audit
Article first published online: 18 AUG 2006
Accounting & Finance
Volume 46, Issue 3, pages 387–404, September 2006
How to Cite
Goodwin-Stewart, J. and Kent, P. (2006), Relation between external audit fees, audit committee characteristics and internal audit. Accounting & Finance, 46: 387–404. doi: 10.1111/j.1467-629X.2006.00174.x
- Issue published online: 18 AUG 2006
- Article first published online: 18 AUG 2006
- Received 13 February 2004; accepted 26 July 2005 by Robert Faff (Editor).
- Audit committee;
- Internal audit;
- Audit fees;
- Corporate governance
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.