The pricing of audit services in South Africa : an analytical study

The pricing of audit services is a complex function of many variables. Prior research has proposed various approaches and models to identify some of these factors. This paper provides a description of one such model. Studies based on this model, or modifications of it, have been performed in Australia, Canada, Hong Kong, India, Ireland, Malaysia, New Zealand, Singapore, the United Kingdom and the United States of America. This thesis reports the findings of a similar study of 104 companies over the period 1991- 1992 conducted in South Africa. The analysis indicates that there is an approximately linear relationship between audit fee and a company's total assets or sales. In addition, management advisory services, number of reports in addition to those required by the Companies' Act, the level of inventory and. debtors in relation to total assets and audit delay, are significant determinants of audit fees. Unlike overseas studies, audit firm size, auditor specialisation, the number of consolidated subsidiaries and audit risk as measured by gearing, liquidity and profitability do not affect the level of audit fees. Whilst the influence of auditee size and complexity have been found to be the most consistent predictors of audit fees, there is an apparent lack of consistency in other variables. These findings are largely consistent with international research and indicate a growing influence of the internationalisation of auditing practice.

Grantor dc:publisher.institution

College of Accounting

Year dc:date.issued

1995

Author dc:creator

• Msibi, Derrick Thembinkosi Vusumuzi

Advisor dc:contributor.advisor

• Everingham, Geoff

Language dc:language.iso

eng

Handle dc:identifier.uri

http://hdl.handle.net/11427/17469

OAI identifier oai:identifier

oai:open.uct.ac.za:11427/17469