The Impact of PCAOB Auditing Standard No. 5 on Audit Fees and Audit Quality
Posted: 18 Jul 2009 Last revised: 1 Mar 2017
Date Written: March 22, 2012
We investigate the impact of PCAOB Auditing Standard No. 5 (AS5) on audit fees and audit quality. AS5 supersedes Auditing Standard No. 2 (AS2) and became effective for audits for accelerated filers for fiscal years ending on or after November 15, 2007. Using a large sample of accelerated filers subject to AS5, we find evidence that audit fees decrease upon the adoption of AS5. More importantly, even though AS5 adoption reduces audit fees for our test sample, we find no evidence of a decrease in audit quality. In summary, we document evidence that AS5 improves the efficiency of internal control audits.
Keywords: PCAOB Auditing Standard No. 5, audit fee, audit quality, internal control
JEL Classification: M41, M44, M49, L84
Suggested Citation: Suggested Citation