You Get What you Pay for?

Posted by & filed under Accounting Principles, Advanced Accounting, All Articles, Auditing, Financial Accounting, Financial Reporting and Analysis, Financial Statement Analysis, Intermediate Accounting.

The SEC regulators are becoming very “worried” that pressure to reduce auditor fees due to economic cycles could lead to worse audits.

Questions:
1. How do auditor switches impact fees?
2. What legal issues could affect audit committees where auditor fee reductions occur?
3. How does fee-hunting exacerbate this situation?
4. What does the study cited by Kapur say about lower audit fees?

Source:
Chasan, E. (2014). SEC Grows Suspicious of Declining Auditor Fees. CFO Journal, Feb. 24 (Retrievable online at http://blogs.wsj.com/cfo/2014/02/24/sec-grows-suspicious-of-declining-auditor-fees/?mod=djemCFO_h)

Kapur, S. (2014). Falling Audit Fees May Increase Restatements: Study, Feb. 28 (Retrievable online at http://blogs.wsj.com/cfo/2014/02/28/falling-audit-fees-may-increase-restatements-study/?mod=djemCFO_h)

SEC