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Jurisdictional Differences in Contracting Out GBE Audits: The Impact on Audit Pricing
Author(s) -
Houghton K. A.,
Dolley C.,
Jubb C. A.,
Chong K. M.
Publication year - 2002
Publication title -
australian accounting review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.551
H-Index - 36
eISSN - 1835-2561
pISSN - 1035-6908
DOI - 10.1111/j.1835-2561.2003.tb00211.x
Subject(s) - audit , jurisdiction , competition (biology) , accounting , business , government (linguistics) , empirical evidence , quality (philosophy) , ecology , linguistics , philosophy , epistemology , political science , law , biology
This paper examines audit costs for government business enterprises in various Australian jurisdictions, focusing on whether contracting private‐sector suppliers induces competitive pricing and hence lower‐priced audits. One jurisdiction (New South Wales) is shown to have low levels of contracting‐out. It is argued that this lowers price competition and therefore, we predict, audit costs in NSW will be higher than elsewhere in Australia. An empirical comparison shows that, controlling for other factors, NSW is statistically significantly more expensive than other Australian jurisdictions. Alternative explanations relating to variation in audit quality, jurisdiction differences and relative cost are also discussed.