Besides providing a glimpse of small-city auditing practices, the study tested the significance of the Single Audit Act in audit-fee determination. Missouri municipalities with populations between 2,000 and 50,000 provided the sample for the study. Because Missouri is one of the few states in the nation that neither legislates nor monitors municipal auditing, it represents an unregulated audit market in which town officials decide on the need for an audit, the firm to conduct the audit, and the process by which the audit firm is selected. The results of a nine-variable regression model suggested that the size of the town, the existence of a city administrator, the complexity of the town's operation, the method of accounting, the timing and completion time of the audit, and audit-firm specialization in municipal auditing were important determinants of audit fees.
Brown, K.W. and Margavio, T.M. (1994), "Audit costs of small cities in an unregulated audit market environment", Journal of Public Budgeting, Accounting & Financial Management, Vol. 6 No. 3, pp. 376-421. https://doi.org/10.1108/JPBAFM-06-03-1994-B003
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