• search hit 1 of 1
Back to Result List

Fair value and audit fees

  • This paper investigates the effect of fair value reporting and its attributes on audit fees. We use as our primary sample the European real estate industry around mandatory IFRS adoption (under which reporting of property fair values becomes compulsory), due to its unique operating and reporting characteristics. We document lower audit fees for firms reporting property assets at fair value relative to those employing depreciated cost―a difference that appears driven (in part) by impairment tests that occur only under depreciated cost. We further find that audit fees are decreasing in firm’s exposure to fair value, and increasing both in the complexity of the fair value estimation and for recognition (versus only disclosure) of fair values. We corroborate our findings in two alternative settings: contrasting UK and US real estate firms; and using UK investment trusts. Overall, the results suggest that fair values can lead to lower monitoring costs; however, any reductions in audit fees will vary with salient characteristics of the fair value reporting, including the difficulty to measure and the treatment within the financial statements.

Download full text files

  • FAccT-WP-01-2012.pdf
    eng

    Copyright restricted matter, please use DOI for access outside WHU campus network.

Export metadata

Additional Services

Search Google Scholar Statistics
Metadaten
Author:Igor Goncharov, Edward J. Riedl, Thorsten Sellhorn
URN:urn:nbn:de:hbz:992-opus4-6811
DOI:https://doi.org/10.2139/ssrn.1855628
DOI:https://doi.org/10.1007/s11142-013-9248-5
Series (Serial Number):FAccT Center Working Paper Series (01/2012)
Publisher:WHU - Otto Beisheim School of Management
Place of publication:Vallendar
Document Type:Working Paper
Language:English
Date of Publication (online):2011/06/03
Date of first Publication:2011/06/03
Release Date:2018/06/19
Tag:Audit-Preisgestaltung; IFRS; Immobilienwirtschaft; Prüfungshonorar; Verkehrswert
Audit fee; Audit pricing; Fair value; IFRS; Real estate industry
Edition:September 2012
Page Number:43
Note:
Published in: Review of Accounting Studies19(2014)1, pp. 210-41
Institutes:WHU Centers / WHU Financial Accounting & Tax Center (FAccT Center)
JEL-Classification:M Business Administration and Business Economics; Marketing; Accounting / M4 Accounting and Auditing / M41 Accounting
M Business Administration and Business Economics; Marketing; Accounting / M4 Accounting and Auditing / M42 Auditing
Licence (German):Copyright for this publication