Factors affecting the determination of audit service fees for companies in Vietnam

Abstract

Currently, tendency of foreign direct investment (FDI) in Vietnam is increasing, the quality and reliability of the financial statements (FS) of these FDI enterprises are considered crucial to information users. In order to increase the transparency of FS, many enterprises sign agreements with independent audit firms to audit their FS. Besides FDI enterprises, pursuant to Vietnam regulations, there are some other types of enterprises required to have audited FS. In order to retain and attract clients, many audit firms may propose a more competitive audit service fees than others. Though unfair competition situation might occur, current regulations on audit service fees in Vietnam are not specific for audit firms to comply with. Given the above situation, the research objectives are to identify the factors and analyze the impact on the determination of audit service fees for enterprises in Vietnam. Based on previous studies and expert discussion, the research model includes 08 factors. Accordingly, the study conducted a survey of 181 independent auditors working at audit firms in Ho Chi Minh City about these factors. For processing and testing hypotheses, the linear regression analysis implemented by SPSS 26.0 software. The findings indicate that there are 05 factors affecting the determination of audit service fees, including (1) Auditee size, (2) Auditee complexity, (3) Auditee risk, (4) Audit reputation, (5) Industry specialization, and all of them have positive influences. In addition, the thesis also conducted Mann-Whitney U test to discover the opinions of two different groups of auditors (Big 4 and Non-Big4 audit firms) whether influencing factors being different or not, and the results show there is no significant difference. Based on these outcomes, the study suggests some recommendations for audit firms; and authorities and professional associations to consider promulgating an audit fee framework for audit firms have the base to set their audit service fees and comply with.