The Level of Audit fees - research study on current issue in Auditing with special emphasis to FTSE 100 Companies in UK

The Level of Audit fees - research study on current issue in Auditing with special emphasis to FTSE 100 Companies in UK Essay example
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Finance & Accounting
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The Level of Audit fees - A research study on a current issue in Auditing with special emphasis to FTSE 100 Companies in UK Introduction The Ethical Standards of the Auditing Practices Board of UK has fixed the ceiling on the level of audit fees that an audit firm can charge from their single client…

Introduction

(BIS 2010:9). As per According to Professional Oversight Board of UK which carried out research on 31 of the bigger UK audit firms finds that in an aggregate ,these companies have earned more than ? 2 billion as audit fees in the year 2009 alone. (BIS 2010:17). Many empirical studies have found that there is a close nexus between the high audit fees and auditor’s connivance with corporate to window dress their accounts. This research essay will study the how the auditor’s independence is impacted especially with the level of audit fees with particular emphasis to the FTSE 100 companies in UK. Level of Audit Fees and Auditor’s Independence As per research study carried over by FRC and BIS jointly in 2006, a restricted quantum of listed companies in UK, which are chiefly engaged in the financial services’ sector of the FTSE100 in UK have no any efficient preference of the auditor in the short run. Non-availability of any alternatives or any choice is pushed by the high market domination, independence of auditors, constraints on supply-side and requirement for segment expertise. Hence, level of audit fees is seemed to be higher as there is a high market concentration, especially in the FTSE 100 sector. During the reappointment process of auditors, there has been some bargaining on the level of fees charged by the auditor as there is some level of price sensitivity among companies. ...
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