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Impact of IFRS adoption on audit pricing: evidence from audit hours and unit audit price in the Korean audit market
Author(s) -
Kang Minjung,
Lee Jungwha,
Ha Mihye,
Cho MoonKyung
Publication year - 2021
Publication title -
accounting and finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.645
H-Index - 49
eISSN - 1467-629X
pISSN - 0810-5391
DOI - 10.1111/acfi.12711
Subject(s) - audit , business , joint audit , accounting , audit evidence , audit plan , performance audit , information technology audit , audit risk , internal audit , chief audit executive
We investigate the impact of IFRS adoption on audit fee components, namely audit hours and unit audit price . We find that IFRS adoption increases audit hours but decreases unit audit price, which indicates audit firms cannot charge extra audit fees for their additional effort in a competitive audit market. Further, the IFRS‐related audit fee increase depends on the client’s bargaining power and audit risk. We thus suggest that the economic burden caused by IFRS adoption cannot be generalised for audit clients, because a competitive audit market imposes an informal limit on audit pricing.