Investigating the relationship between agency cost indicators and audit fees and providing an independent audit fee estimation model in Iran

Rajab Ali kevani Hafshjani¹

1) Author

IOI Code : XFZH-HHFKC
Publication : 3rd International Conference on Advanced Research in Management And Humanities(huconf.com/3rd)
Abstract :
    This research has paid attention to the aspect of agency theory in order to provide a suitable model for estimating audit fees. According to the representation theory, managers and employers are in conflict of interest, as a result, people have to bear agency costs in order to align the interests of others with themselves or to minimize the effects of conflict of interest, the manager who is at the center of this conflict of interest has many powers. and the need to monitor the manager s performance raises the professional judgment of the independent auditor. Representation costs can have significant effects on audit service fees by increasing the risk, size and complexity of the unit s operations. As a result, it is necessary to provide a model for determining the audit fee that takes the representation cost index into consideration. be made This research tries to consider the effect of two categories of general factors and agency cost indicators that are effective on the risk, volume and complexity of the unit s operation under consideration as independent research variables and examine its effect on the dependent variable which is the audit fee. The purpose of researching the pricing of audit services is to develop a model for estimating audit fees. In this research, the general factors affecting audit fees are: the average logarithm of total assets and operating income, the ratio of profit before deduction of interest and taxes to assets, the ratio of total accounts receivable to assets, and the end of the financial year, and agency indices affecting Fees include: the ratio of total liabilities to assets, the ratio of non-executive members of the board of directors to all members, the ratio of the share of government institutions, the ratio of the share of the first major shareholder. The main hypothesis of the research is to investigate the relationship between the indicators of agency fees and audit fees. This relationship has been used by multivariate regression. The information needed to test the hypotheses was collected from the companies admitted to the Tehran Stock Exchange for the years 1998-1994. The results of the research show that there is a significant relationship between agency cost indicators and audit fees.

Keywords : independent audit audit of financial statements agency fees