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1 – 10 of over 22000
Article
Publication date: 1 March 2006

Federal agencies can directly purchase more than 8 million commercial products and services through the General Services Administration’s (GSA) multiple award schedules…

Abstract

Federal agencies can directly purchase more than 8 million commercial products and services through the General Services Administration’s (GSA) multiple award schedules (MAS) contracts. Over the past 10 years, MAS contract sales have increased dramatically--with sales jumping from $4 billion to $32 billion. In addition to simplifying the procurement process, the MAS program is designed to take advantage of the government’s significant aggregate buying power. While GSA seeks to negotiate best pricing for its MAS contracts by analyzing vendor-provided information--such as discounts given to other customers and recent sales data for the same or similar items--past reports have found that GSA has not always used pricing tools effectively and that management controls for better ensuring fair and reasonable pricing had been reduced. This report discusses GSA’s process for negotiating most favored customer prices for MAS contracts and its efforts to improve the overall quality of negotiations. Contract negotiators at the four MAS acquisition centers that GAO reviewed use a variety of tools for obtaining most favored customer pricing--that is, the prices vendors offer their best customers. However, the GAO analysis of GSA’s review of selected fiscal year 2004 MAS contract files found that nearly 60 percent lacked the documentation needed to establish clearly that the prices were effectively negotiated. Specifically, the contract documentation did not establish that negotiated prices were based on accurate, complete, and current vendor information; adequate price analyses; and reasonable price negotiations. GSA’s efforts to ensure most favored customer pricing have been hindered by the significant decline in the use of pre-award and postaward audits of pre-award pricing information, two independent pricing tools that have helped GSA avoid or recover hundreds of millions of dollars in excessive pricing. In fiscal year 1995, GSA conducted 154 pre-award audits; by 2004 the number of pre-award audits fell to 40. Postaward audits--which resulted in an average annual recovery of $18 million in the early 1990s--were discontinued in 1997 when GSA revised its MAS contract audit policies to increase the use of pre-award audits--an increase that has not materialized. In March 2003, GSA established the Acquisition Quality Measurement and Improvement Program, initiating the use of prenegotiation panels and postaward quality reviews of contracts. However, the effectiveness of these initiatives has been limited due to insufficient oversight. For example, three of the MAS acquisition centers that GAO visited had not reported the results of their 2003 prenegotiation panels--information needed by management to identify problems and make needed improvements. Moreover, the fourth acquisition center--which accounted for about 56 percent of the fiscal year 2004 MAS sales--has yet to hold a panel. While the postaward quality reviews--the second program initiative--have identified deficiencies in contract file documentation, they did not determine the underlying causes of these deficiencies or prescribe actions needed to address them. As a result of these weaknesses, GSA cannot be assured that fair and reasonable prices have been negotiated for its MAS contracts.

Details

Journal of Public Procurement, vol. 6 no. 3
Type: Research Article
ISSN: 1535-0118

Article
Publication date: 12 September 2016

Abdul Haris Muhammadi, Zahir Ahmed and Ahsan Habib

The purpose of this paper is to examine the challenges faced by Indonesian tax auditors in auditing multinational transfer prices of intangible assets. This study then…

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Abstract

Purpose

The purpose of this paper is to examine the challenges faced by Indonesian tax auditors in auditing multinational transfer prices of intangible assets. This study then explores the suitability of mechanisms currently used by Indonesian tax auditors to ensure appropriate tax audit adjustments.

Design/methodology/approach

The authors use a qualitative research method involving semi-structured and open-ended interviews with the tax auditors in Indonesia. The authors also include some Indonesia court decisions pertinent to the research question above.

Findings

Findings indicate that Indonesian tax auditors face a number of difficulties during the audit of transfer pricing cases derived from intangible property, including a lack of transparency in taxpayers’ bookkeeping; limited taxpayer cooperation in providing data and documents; transfer pricing regulations; and problems related to organization and human resources. The study also finds that Indonesian tax auditors and tax officials handle transfer pricing cases by using a legal basis as reference and by performing a number of activities, including among others, comparable analysis.

Originality/value

The findings of this study should assist policy makers to improve the quality of transfer pricing audit. Also, tax auditors and account representatives who do not have enough experience in auditing transfer pricing cases derived from intangible property rights might use the outcomes of this study as a guide for dealing with those cases.

Details

Asian Review of Accounting, vol. 24 no. 3
Type: Research Article
ISSN: 1321-7348

Keywords

Article
Publication date: 1 December 2005

Andrew Ferguson

This paper provides a review of the extensive contributions made to the audit pricing literature by researchers utilizing Australian data. Recent United States [hereafter…

Abstract

This paper provides a review of the extensive contributions made to the audit pricing literature by researchers utilizing Australian data. Recent United States [hereafter US] regulatory requirements under the Sarbanes Oxley Act (Section 102) have mandated disclosure of audit fees. As such this is a useful occasion to review the existing Australian audit pricing research, since the audit fee disclosure advantage once enjoyed by Australian researchers has now effectively dissipated. Beginning with the origins and genesis of audit pricing research in Australia, this review then discusses the key contributions to the literature over time. It concludes with some brief discussion of potential research directions.

Details

Accounting Research Journal, vol. 18 no. 2
Type: Research Article
ISSN: 1030-9616

Keywords

Article
Publication date: 1 February 2016

Vikram Desai, Bixia Xu and Tao Zeng

The historical development and size of China’s audit market provides an opportunity to investigate important questions regarding the functioning of the market for audit

Abstract

Purpose

The historical development and size of China’s audit market provides an opportunity to investigate important questions regarding the functioning of the market for audit services that are difficult, if not impossible, to test in other globally established markets. The purpose of this paper is to examine the effect of the market entry of the Big Four accounting firms into China on the audit fees charged by its local accounting firms.

Design/methodology/approach

In this paper the authors rely primarily on the incumbent pricing literature (Simon, 2005; Geroski, 1995) to assist them in developing the specific hypotheses and empirical tests. This paper is an empirical study, which examines whether local incumbent accounting firms cut prices in response to the Big Four’s entry by using data from annual reports and audit reports for China’s listed companies from the 1994 to 2008 period.

Findings

This study shows that local incumbent firms cut prices post-entry. This study also finds that it was local large-sized accounting firms as well as accounting firms located in regions with highly developed- and competitive markets that cut prices in response to the Big Four’s entry.

Practical implications

This study has important implications for the Big Four accounting firms as it provides useful information about pricing strategies that would likely be used by local accounting firms in a new market. Local accounting firms in emerging markets can also gain useful insights about the pricing strategies adopted by the Big Four accounting firms when they enter a market.

Originality/value

Audit market research has little to offer on how local accounting firms respond in their pricing to the entry of Big Four accounting firms into their market, mainly because in western countries such as Canada, England, and the USA, the Big Four accounting firms are the oldest firms operating in those markets. This paper is the first study that examines the effect of the market entry of the Big Four accounting firms into China.

Details

Journal of Accounting in Emerging Economies, vol. 6 no. 1
Type: Research Article
ISSN: 2042-1168

Keywords

Article
Publication date: 2 November 2015

Barri Litt, Vikram Desai and Renu Desai

The purpose of this paper is to explore the audit price reactions of local accounting firms to the entry of the Big Four accounting firms into the Indian audit market…

Abstract

Purpose

The purpose of this paper is to explore the audit price reactions of local accounting firms to the entry of the Big Four accounting firms into the Indian audit market, providing unique insight into emerging market dynamics.

Design/methodology/approach

Using financial data from Indian audit clients for a ten-year period from 1996 to 2005, the authors conduct a multivariate regression analysis based on extant audit fee literature.

Findings

This study finds evidence of a price-cutting strategy on behalf of the local incumbent accounting firms in response to the entry of the Big Four firms. It also shows small-sized incumbent firms to cut prices more drastically relative to medium-sized incumbent firms.

Originality/value

This study provides empirical insight into the pricing dynamics of professional services in an emerging market setting. Such insight is increasingly important in our evermore globalized economy where emerging markets are frequently the targets of expansion.

Details

Journal of Accounting in Emerging Economies, vol. 5 no. 4
Type: Research Article
ISSN: 2042-1168

Keywords

Article
Publication date: 3 August 2018

Juan L. Gandía and David Huguet

Despite the extensive research on the determinants of audit pricing in both public and private settings, there is a lack of research about the differences in audit fees…

Abstract

Purpose

Despite the extensive research on the determinants of audit pricing in both public and private settings, there is a lack of research about the differences in audit fees between voluntary audits and mandatory audits. The purpose of this paper is to address this gap.

Design/methodology/approach

First, a theoretical framework is developed to justify differences in audit pricing between voluntary and mandatory audits. Next, using a sample of Spanish private small and medium enterprises (SMEs) running from 2009 to 2014, the authors empirically test whether the fees charged for voluntary audits differ from those charged for mandatory ones. The authors also examine whether the premium observed among large auditors is persistent in the SME setting, and whether this premium differs depending on whether the audits are voluntary or mandatory.

Findings

Although a preliminary analysis does not report significant differences in pricing between voluntary and mandatory audits, additional analyses using samples restricted by company size show that voluntary audits are charged with a premium. The authors observe a premium related to large auditors, and find no significant differences in the audit pricing of Big 4 auditors depending on the mandatory/voluntary nature of the audit, but the premium associated with Middle-Tier auditors disappears in the voluntary setting.

Originality/value

This paper contributes to the previous literature by introducing the examination of differences in audit pricing between voluntary and mandatory audits. As far as the authors know, this is the first study to examine the differences in audit pricing between voluntary and mandatory audits. It also elaborates on studies on audit pricing in SMEs.

Objetivo

A pesar de la extensa investigación sobre los determinantes de los honorarios de auditoría tanto en el entorno de las empresas cotizadas como de las no cotizadas, existe poca investigación sobre las diferencias en los honorarios entre las auditorías voluntarias y las obligatorias. El presente estudio aborda esta carencia.

Diseño/metodología/enfoque

En primer lugar, se desarrolla un marco teórico que trata de justificar diferencias en el precio de la auditoría entre auditorías voluntarias y obligatorias. Después, usando una muestra de pymes españolas no cotizadas para el período 2009–2014, testamos empíricamente si los honorarios cargados en las auditorías voluntarias difieren de los cargados en las auditorías obligatorias. Examinamos también si la prima observada entre los grandes auditores en el entorno de las pymes es persistente, y si esta prima difiere en función de si la auditoría es voluntaria u obligatoria.

Resultados

Aunque el análisis preliminar no reporta diferencias significativas en el precio de la auditoría entre auditorías voluntarias y obligatorias, análisis adicionales usando muestras restringidas por el tamaño de las compañías muestran que las auditorías voluntarias soportan una prima con respecto a las obligatorias. Observamos también una prima relacionada con los auditores grandes y medianos, y no encontramos diferencias significativas en el precio de la auditoría para las Big 4 en función de la naturaleza obligatoria/voluntaria de la auditoría, mientras que la prima asociada con los auditores medianos desaparece en el entorno voluntario.

Originalidad/Valor

El estudio contribuye a la literatura previa al introducir el análisis de las diferencias en el precio de la auditoría entre auditorías voluntarias y obligatorias. Hasta donde sabemos, éste es el primer estudio que examina las diferencias de precio entre ambos entornos. El estudio también extiende la literatura previa sobre los honorarios de auditoría en las pymes.

Details

Academia Revista Latinoamericana de Administración, vol. 31 no. 2
Type: Research Article
ISSN: 1012-8255

Keywords

Article
Publication date: 1 December 2007

Hilwani Hariri, Norshimah Abdul Rahman and Ayoib Che Ahmad

The merger of PriceWaterhouse and Coopers & Lybrand marked another historical event in the accounting and auditing industry. Both firms were optimistic that the merger…

Abstract

The merger of PriceWaterhouse and Coopers & Lybrand marked another historical event in the accounting and auditing industry. Both firms were optimistic that the merger would enhance the performance as well as the profession of the merged firms. This research studies the impact of the merger and the price of audit service charged to their clients. The findings showed that there is no significant impact of the merger on audit pricing. The results provide richer understanding of the relationship between organizational structure and pricing in a developing country.

Details

Journal of Financial Reporting and Accounting, vol. 5 no. 1
Type: Research Article
ISSN: 1985-2517

Keywords

Article
Publication date: 18 August 2022

Jayalakshmy Ramachandran, Yezen H. Kannan and Samuel Jebaraj Benjamin

This paper aims to investigate auditors’ pricing of excess cash holdings and the variation in their pricing decisions in light of the precautionary motives of cash…

Abstract

Purpose

This paper aims to investigate auditors’ pricing of excess cash holdings and the variation in their pricing decisions in light of the precautionary motives of cash holdings and certain firm-specific conditions and during periods of crisis.

Design/methodology/approach

The authors conduct the two-stage-least-squares multivariate analysis using a sample of publicly listed non-financial US firms for the period 2003 to 2021 (42,413 firm-year observations).

Findings

The findings show a significant positive relationship between excess cash and audit fee. Next, the authors find that audit pricing of excess cash is significantly higher for firms with lower financial constraints. However, the authors do not find evidence to suggest that auditors price excess cash significantly higher for firms with lower hedging needs. In additional analysis, the authors find evidence to suggest that auditors charge significantly less for excess cash in firms that report financial loss and firms operating in industries with high litigation risk. The additional analysis also reveals excess cash is not positively and significantly priced by auditors as a result of the global financial crisis and Covid-19 pandemic.

Originality/value

Most researchers have analyzed excess cash holding from the perspective of managers, i.e. agency conflict or managerial prudence, while somewhat neglecting auditors’ perception of the embedded risk of excess cash holdings. The authors provide new insights on auditors’ perspective of excess cash holding and identify certain factors/situation/conditions that cause variation in the audit fee premium. The findings offer useful insights for managers and shareholders who are interested in assessing the effects of excess cash holdings policies on the audit fee premium.

Details

Meditari Accountancy Research, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2049-372X

Keywords

Article
Publication date: 6 February 2017

Thanyawee Pratoomsuwan

Because there is mixed evidence regarding Big N fee premiums across countries, the purpose of this paper is to re-examine the phenomenon of audit price differentiations in…

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Abstract

Purpose

Because there is mixed evidence regarding Big N fee premiums across countries, the purpose of this paper is to re-examine the phenomenon of audit price differentiations in the market for auditing services in Thailand. Although Hay et al. (2006) and Hay (2013) reviewed over 80 audit fee papers from 20 countries over 25 years, 13 of which were based in emerging economies, the understanding of the market for auditing services in Thailand remains limited. Because the Thai auditing market is also classified as a segmented market – i.e., a market that is less competitive for large-client firms and more competitive for small-client firms – this study tests audit price competition in an emerging audit market using Thailand as an example.

Design/methodology/approach

The traditional audit fee model is used to estimate audit fee premiums for a sample of over 300 non-financial companies listed on the Stock Exchange of Thailand in 2011.

Findings

Although the market for auditing services in Thailand is consistent with that described in Ferguson et al. (2013) – in which Big N audit firms dominate only the large-client segment – the results show that Big N auditors charge higher audit fees and earn higher fee premiums compared with non-Big N auditors in both the small- and large-client segments of the audit market.

Research limitations/implications

The evidence from this study reveals the existence of Big N fee premiums across market segmentations. Audit price differentials between Big N and non-Big N firms in both small- and large-client market segments might concern regulators regarding competition in the audit market with respect to whether the Big N firms are charging uncompetitive audit fees. These findings also imply that audit pricing varies across countries and the Big N price deferential is typically larger in emerging markets than in more developed audit markets and that it might be inadequate to study single-country audit pricing. However, the question whether the Big N fee premium results from Big N product differentiation is not directly investigated in this study.

Originality/value

Because earlier studies focusing on audit fee premiums have been conducted using data from the USA and Australia, the findings add to the limited evidence regarding audit fee premiums in an emerging country such as Thailand.

Details

Journal of Accounting in Emerging Economies, vol. 7 no. 1
Type: Research Article
ISSN: 2042-1168

Keywords

Article
Publication date: 1 July 2014

Mahbub Zaman and Jaravee Chayasombat

There is limited evidence on how differences in economic environments affect the demand for and supply of auditing. Research on audit pricing has mainly focused on large…

Abstract

Purpose

There is limited evidence on how differences in economic environments affect the demand for and supply of auditing. Research on audit pricing has mainly focused on large client markets in developed economies; in contrast, the purpose of this paper is to focus on the small client segment in the emerging economy of Thailand which offers a choice between auditors of two different qualities.

Design/methodology/approach

This paper is based on a random stratified sample of small clients in Thailand qualifying for audit exemption. The final sample consists of 1,950 firm-year observations for 2002-2006.

Findings

The authors find evidence of product differentiation in the small client market, suggesting that small firms view certified public accountants as superior and pay a premium for their services. The authors also find that audit fees have a positive significant association with leverage, metropolitan location and client size. Audit risk and audit opinion are not, however, significantly associated with audit fees. Furthermore, the authors find no evidence that clients whose financial year ends in the auditors’ busy period pay significantly higher audit fees, and auditors engage in low-balling on initial engagements to attract audit clients.

Research limitations/implications

The research shows the importance of exploring actual decisions regarding audit practice and audit pricing in different institutional and organizational settings.

Originality/value

The paper extends the literature from developed economies and large/listed market setting to the emerging economy and small client market setting. As far as the authors are aware, this is the first paper to examine audit pricing in the small client market in an emerging economy.

Details

Journal of Accounting in Emerging Economies, vol. 4 no. 2
Type: Research Article
ISSN: 2042-1168

Keywords

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