Factors influencing independent audit fees: Multi-group analysis PLS-SEM and moderate model

Abstract: This study is conducted to investigate the levels of factors influencing audit fees for clients of Vietnamese garment and textile firms. Data are collected from 186 auditors in independent audit firms in Vietnam. We use PLS analysis on Smart PLS 3.0 and test the scale’s reliability with Cronbach’s Alpha index and the total correlation on the software of SPSS 22.0. The results show that the characteristics of audit firm, customers, auditors, characteristics of the audit and the relationship between the audit firm and customers had positive effects on the audit fee. The moderate role of auditor's age, qualification in the relationship between the auditor's characteristics on the audit fee are also verified. The findings reveal that the higher level the auditors are, and the more experiences the auditors are, the higher the cost of audit fee is. The results of multi-group analysis between auditors and customers group show that auditors believed that the characteristics of customers had the strongest impact on audit fees, whereas the audited clients claim that the characteristics of audits had the strongest impact on audit fees.

How to cite this paper

 Tran, M., Pham, T., Phan, T., Hoang, T., Do, D & Dinh, T. (2019). Factors influencing independent audit fees: Multi-group analysis PLS-SEM and moderate model.Management Science Letters , 9(10), 1599-1608.

Refrences

Abu-Nassar, M. H. (1999). Determinants of audit fees in Jordan from the viewpoints of external audi-tors and corporations. Dirasat: Administrative Science, 26(2), 397–410.
Al‐Najjar, B. (2015). The effect of governance mechanisms on small and medium‐sized enterprise cash holdings: Evidence from the United Kingdom. Journal of Small Business Management, 53(2), 303-320.
Al-Najjar, B. (2018). Corporate governance and audit features: SMEs evidence. Journal of Small Busi-ness and Enterprise Development, 25(1), 163-179.
AL-Mutairi, A., Naser. K. & Al-Enazi, N. (2017). An empirical investigation of factors affecting Audit fees: Evidence from Kuwait. International Advances in Economic Research, 23(12), 333–347.
Al-Nimer, M. (2015). Factors affecting mandatory audit rotation: evidence from Jordan. International Journal of Economics and Finance, 7(6), 51–59.
Al-Fadal, M. (2003). Analyzing the important of the affective factors in determining financial auditing fees in Iraq comparative study through corporations and auditors views. Economic Horizon, 24, 85-123.
Alanezi, F., & Alfraih, M. (2016). The awareness of external auditors and the management of Kuwaiti listed companies on determinants of audit fees: an exploratory study. International Journal of Busi-ness and Management, 11(1), 108–123.
Barakat, A., & Shaban, O. (2007). Factors affect on the determination factors affect auditing fees in Jordan. Journal of Human Sciences, 5(35), 17-26.
Birjandi, H., Birjandi, M., Mihandoost, R., & Sedaghat, M. (2013). The relationship between the audi-tor and the client and its impact on audit quality in Iran. International Journal of Accounting, Bank-ing and Management, 1(2), 20–33.
Chan, P., Ezzamel, M., & Gwilliam, D. (1993). Determinants of audit fees for quoted UK companies. Journal of Business Finance and Accounting, 20(6), 765–786.
Carcello, J., Hermanson, D.R., Neal, T., & Riley, R. (2002), “Board characteristics and audit fees”, Contemporary Accounting Research, 19, 365-385.
Chin, W. W. (1998). The partial least squares approach to structural equation modeling. Modern methods for business research, 295(2), 295-336.
Choi, J.-H., Kim, C., Kim, J.-B., & Zang, Y. (2010). Audit office size, audit quality, and audit pricing. Auditing: A Journal of Practice & Theory, 29(1), 73–97.
Dahdoh, H. (2005). The effective factors of determining the financial auditing fees in Syria, Irbid, the Dean of Scientific Research, 1 (November) (pp. 35–66). Irbid: Irbid National University.
Fornell, C., & Larcker, D. F. (1981). Structural equation models with unobservable variables and meas-urement error: Algebra and statistics.
Fornell, C., & Bookstein, F. L. (1982). Two structural equation models: LISREL and PLS applied to consumer Exit-Voice theory. Journal of Marketing Research, 19(4), 440-452.
Hales, S. (2003). Factors affecting audit fees in Palestine. Islamic University Journal, 11(1), 248–275.
Hassan, Y., & Naser, K. (2013). Determinants of audit fees: evidence from an emerging economy. In-ternational Business Research, 6(8), 13–25.
Hair, J., Hollingsworth, C. L., Randolph, A. B., & Chong, A. Y. L. (2017). An updated and expanded assessment of PLS-SEM in information systems research. Industrial Management & Data Systems, 117(3), 442-458.
Henseler, J., Ringle, C., & R. Sinkovics, R. (2009). The use of partial least squares path modeling in in-ternational marketing, Advances in International Marketing, 20, 277-319.
Hesar, H., Panahi, H., Yazdi, H., & Shafiee, M. (2014). A study of the relationship between audit fees and board compensation in TSE-listed firms. Journal of Educational and Management Studies, 4(2), 204–209.
Karim, W., & Hasan, T. (2012). The market for audit services in Bangladesh. Journal of Accounting in Emerging Economies, 2(1), 50–66.
Naser, K., & Hassan, Y. M. (2016). Factors influencing external audit fees of companies listed on Du-bai financial market. International Journal of Islamic and Middle Eastern Finance and Management, 9(3), 346–363.
Palmrose, Z. V. (1986). Audit fees and auditor size: further evidence. Journal of Accounting Research, 24(1), 97–110.
Sangani, M., Hadji, S., & Nahr, A. (2015). Identification and ranking of the factors affecting audit quality based on the views of independent auditors and users of audit services. Science Journal, 36(3), 2039–2048.
Suyono, E. (2012). Determinant factors affecting the audit quality: an Indonesian perspective. Global Review of Accounting and Finance, 3(2), 42–57.
Suwaidan, M., & Qasim, A. (2010). External auditors’ reliance on internal auditors and its impact on audit fees: an empirical investigation. Managerial Auditing Journal, 25(6), 509–525.
UlHaq, A., & Leghari, M. (2015). Determinants of audit fee in Pakistan. Research Journal of Finance and Accounting, 6(9), 176–188.
Vafeas, N. (1999). Board meeting frequency and firm performance. Journal of financial econom-ics, 53(1), 113-142.
Vermeer, T. E., Raghunandan, K., & Forgione, D. A. (2009). Audit fees at US non-profit organizations. Auditing: A Journal of Practice & Theory, 28(2), 289–303.