ScholarWorks@숙명여자대학교

초록

People are recently fearing that an excessive competitions among auditors and the boss-subordinate relationships between firms and auditors lead to reduction of audit fees, and in turn, it turn into lowering audit quality. This paper examines whether auditors decrease audit hours or not when audit fees are too low. Using 5,517 firm-years observations from 2011 to 2014, we find that actual audit hours are less than standard audit hours when the abnormal audit fees are low. Empirical results also show that the effect of audit fees on audit hours are dissimilar among auditors. Big 4 did not decrease audit hours as much as Non-big 4 did even though the abnormal audit fees are low because Big 4 are more likely to be sued and suffer large damage awards. The Government’s proposed accounting reforms require KICPA to prepare the guide line for audit hours. However, some auditors complain that if regulatory bodies control only audit hours without dissolving the boss-subordinate relationships between firms and auditors, the profitability of audit work would get worse. According to our results, audit hours were significantly increased after providing standard audit hours by KICPA. However, it did not turn into increase of audit fees.

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