search query: @author Balachandran, B. V. / total: 10
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| Author: | Balachandran, B. V. Ramakrishnan, R. T. |
| Title: | A theory of audit partnerships : audit firm size and fees. |
| Journal: | Journal of Accounting Research
1987 : SPRING, VOL. 25:1, p. 111-126 |
| Index terms: | AUDITING COSTS |
| Language: | eng |
| Abstract: | The present paper analyzes the effect of audit firm size on audit fees. An economic model is developed using an agency framework, considering the uncertainties involved in the audit process and the auditor's incentives. Optimal fee schedules are computed for a fixed level of audit effort. Since audit efforts are generally unobservable a contingent contract is needed with fees dependent on the ex post correctness of the audit opinion. Agencies will try to minimize the difference between second best and first best fees. |
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