EMPIRICAL ANALYSIS FOR DETERMINANTS OF AUDIT FEES; EVIDENCE FROM PUBLIC INSTITUTIONS IN TANZANIA

Abstract

This study intends to analyze the determinants of audit fees for public institutions in Tanzania. Also, the study seeks to fill the gap through testing the relationship between employed study variables in an explanatory design. The study was guided by seven predictors which were internal audit/controls, macroeconomic variables, complexities, regulations/reputations, client size, audit expenses, and auditor size which were tested on audit fees as the dependent variable. The study employed secondary data covering the period of 5 years (2013-2018) from 11 public companies/organizations based on the identified independent variables with a pooled regression model. The collected facts were computed and examined through E-view software version 9 to generate statistical measurements concerning the dependent variable. The study results indicate that four predictors which are recognition/reputation, audit size, client size, and audit expenses have a positive significant effect on the determination of audit fees (p<0.05). However, the other predicting variables which are internal audit/controls, macroeconomic variables, and complexities were positive with insignificant effect on audit assignment pricing. The empirical findings indicate that for public entities, audit fee is a function of audit size, reputation/recognition, client size, and expenses. On that note, the study recommends that it is important for the Government to prepare clusters among its entities to enable variations in auditing requirements to reduce costs, limit malpractices such as corruption, briberies, nepotism, and others; presenting true and fair results as well as enabling opportunities for small audit firms to participate in the practice.