Factors Affecting Audit Fees in Private Commercial Banking Industries: In Ethiopia
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Date
2016-02
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Addis Ababa University
Abstract
The main purpose of this study is to investigate factors affecting audit fees in private commercial
banking industries. This investigation is focused on 13 private commercial banking industries using
purposively sampling technique and collected primary data of 113 respondents out of 117 that were
expected to represent population. The board of directors, audit committees, internal controllers,
internal auditors and the finance directors of the selected private commercial banks are the sources
for the required data to the researcher through the questionnaires administered and self-collected. In
addition, used the secondary data to analysis the bank size (total assets) verse audit costs from
annual audited financial statements of 5 years from (2010/11 to 2014/15) of those private banks.
The findings from regression and correlation analysis of the pooled data at 10% level of
significance result revealed that all board characteristics, audit committee characteristics, audit
quality, audit firm size , audit risk and bank size are found to be the major factors influencing the
variation in audit fees in the Ethiopian commercial banking industries. Typically, board
characteristics, audit committee characteristics and in turn audit qualities are inversely connected
with audit fee. In addition, the audit risks, audit complexity, audit firm size and bank size directly
affects audit fees. Therefore, private commercial banking industries thus better focus on factors that
deemed to have significant effect with audit fees; being it results to audit quality assurance which is
nearsighted by government and shareholder as well by the concerned bodies.
Key words: Audit fees, board of directors, audit committee, audit complexity, bank size, audit firm
size, audit risk and audit quality, Ethiopian private commercial banking industry
Correlation and regression analysis
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Keywords
Audit fees, board of directors; audit committee; audit complexity; bank size; audit firm size; audit risk and audit quality; ethiopian private commercial banking industry correlation and regression analysis.