Large Audit Fees

Central issues on size of firms, auditor’s reputation and audit fees
There are many issues to maintain audit quality sustainability. The most important issue is size of the company. Therefore, clients are more likely to have high quality company to get the best auditing opinion. So, they are more interested to choose large audit firm that have high reputation and have high quality rather that small audit firm. Besides that, we can say that, the higher reputation, the more accurate audit report because low accurate audit report can lead to lower reputation of the company. Apart from that, the other researcher said that there is no difference between large audit firms and small’s one in terms of audit quality and reputation, both of them have

Therefore the higher the audit fees, some client are more intend to choose large audit firm. Greater audit fees are also associated with the choice of qualified auditors; this is because clients are confident that large audit firms have greater monitoring and bonding in order to capture higher audit quality. In area of auditor specialization, including continuing education, large audit companies hire good professionals compared to small companies. So, the larger the audit firm the higher auditor’s specialization (and audit quality) is expected and therefore higher audit fees is achieved. For example, as the demand for higher audit quality as well as additional activities is increased, higher audit fee is expected for company (Houghton & Jubb, 1999). The issue is, for the clients who are only have low audit fees, they cannot get or choose auditors from large company who have qualifies and professional auditors that are able to produce accurate and quality audit report. So, this will hard to that client to manage their audit quality

In the capital theory revealed that, more trusted audit firms can demand higher audit fees, because of the market value of their audit reports. As a result, the auditor reputation as well as the audit fee can be influenced (DeFond et al., 2002). Several studies have investigated the relationship between audit quality and auditor size (e.g., Francis & Yu, 2009; Hay & Davis, 2004). Most of studies confirmed that the large size auditors are positively influence with audit quality (e.g., Colbert & Murray, 1995; DeAngelo, 1981; O’Keefe & Westort, 1992). In conclusion, higher audit fee may result the higher audit quality (Eshleman & Guo, 2014) through increasing audit efforts as well as the utilization of higher qualified