Auditing remains a fundamental tool of financial management\r\noversight. Despite of auditing ability to enhance confidence and reliability of\r\nthe financial statements, there has been increasing criticisms addressed to the\r\naudit profession in the recent past especially after the failure of several\r\ninternational and local companies which occasioned doubt on the oversight\r\nrole of audit due to its overreliance on financial statements at the expense of\r\nbusiness risks. Consequently, auditors have been compelled to reengineer\r\ntheir audit approaches to be more responsive to business risks. The purpose\r\nof this study was to evaluate the moderating impact of business risks on the\r\nrelationship between audit fees and its determinants among audit firms in\r\nWestern Region, Kenya using cross-sectional survey research design with a\r\ntarget population of 48 Audit firms. Saturated sampling technique was used\r\nin which data was collected using self administered questionnaires. The\r\nstudy revealed existence of significant moderating effect of business risks on\r\nthe both audit duration and size of the audit firm ââ?¬â?? audit fee relationship. The\r\nstudy concludes that clientââ?¬â?¢s size, complexity as determined by number of\r\nsubsidiaries and branches and audit firm size are the major determinants of\r\naudit fee and that their effect can further be enhanced by business risks, the\r\nmoderator variable. The study provides rationale for BRA and its findings\r\nprovides direction for response to business risks among audit practitioners as\r\nwell as enriching the literature of audit risk and fee model with evidences\r\nfrom emerging economies.
Loading....