Proceedings of the 6th International Accounting Conference (IAC 2017)

Impact of Abnormal Audit Fee on Audit Opinion

Authors
Louis Bernardus Dupa Sangkrista, Fitriany Fitriany
Corresponding Author
Louis Bernardus Dupa Sangkrista
Available Online August 2017.
DOI
https://doi.org/10.2991/iac-17.2018.45How to use a DOI?
Keywords
Abnormal Audit Fee; Audit Opinion; Opinion Shopping; Audit Fee
Abstract

The objectives of this research are to investigate whether abnormal audit fees affect the probability of audit opinion deteriorating, and whether abnormal audit fees influence the probability of receiving unqualified auditing opinions. Abnormal audit fees comprise the difference between the actual audit fee paid to the auditor and the expected, normal fee that should have been charged for the audit engagement effort. An ordered logit regression technique was used. The study shows that an increase in abnormal auditing fees increases the probability of a better audit opinion given by the auditor. As a result, a degree of opinion shopping does occur in Indonesia. Furthermore, this study also finds that increases in abnormal audit fees also increase the probability of companies obtaining unqualified audit opinions. This shows that abnormal audit fees influence the audit opinion via opinion shopping, increasing auditors’ dependence on their clients and decreasing the independence of the auditor. This research provides advice for regulators to encourage mandatory disclosure on auditing fees. Based on available data, it is evident that companies engage in the practice of opinion shopping, in order to maintain or gain a better opinion. Audit fees that are not disclosed allow companies to take these actions more freely, without being controlled by stakeholders. Opinion shopping practices are harmful for capital market conditions because they erode the trust of stakeholders around assurance services.

Copyright
© 2018, the Authors. Published by Atlantis Press.
Open Access
This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

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Volume Title
Proceedings of the 6th International Accounting Conference (IAC 2017)
Series
Advances in Economics, Business and Management Research
Publication Date
August 2017
ISBN
978-94-6252-519-1
ISSN
2352-5428
DOI
https://doi.org/10.2991/iac-17.2018.45How to use a DOI?
Copyright
© 2018, the Authors. Published by Atlantis Press.
Open Access
This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

Cite this article

TY  - CONF
AU  - Louis Bernardus Dupa Sangkrista
AU  - Fitriany Fitriany
PY  - 2017/08
DA  - 2017/08
TI  - Impact of Abnormal Audit Fee on Audit Opinion
BT  - Proceedings of the 6th International Accounting Conference (IAC 2017)
PB  - Atlantis Press
SP  - 254
EP  - 259
SN  - 2352-5428
UR  - https://doi.org/10.2991/iac-17.2018.45
DO  - https://doi.org/10.2991/iac-17.2018.45
ID  - Sangkrista2017/08
ER  -