Abnormal Monitoring Costs Charged for Auditing Fair Value Model: Evidence from Jordanian Finance Industry

Esraa Esam Alharasis, Hossam Haddad, Maha Shehadeh and Ahmad Saleem Tarawneh
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Esraa Esam Alharasis: Department of Accounting, Faculty of Business, Mutah University, Mutah 61710, Jordan
Hossam Haddad: Department of Accounting, Faculty of Business, Middle East University, Amman 11831, Jordan
Maha Shehadeh: Department of Accounting, Faculty of Business, Middle East University, Amman 11831, Jordan
Ahmad Saleem Tarawneh: Department of Accounting, Faculty of Business, Mutah University, Mutah 61710, Jordan

Sustainability, 2022, vol. 14, issue 6, 1-21

Abstract: This article inspects the likely outcome of using the fair value (FV) concept on audit firms’ anomalous audit fees. The research performs fixed effects regression to evaluate the given hypotheses using data gathered by hand from 105 Jordanian publicly traded enterprises between 2005 and 2018. The study reveals that FV proxies have a favorable and substantial effect on the atypical audit fees paid by Jordanian enterprises. The findings are more evident for businesses with a higher percentage of subjective FVs (level 3 assets). This research gives current empirical information on the effects of adopting IFRS/IAS for policymakers and standard setters. The results contribute by offering recommendations on the factors that influence audit fees for auditors and clients. The present research updates the Fair Value Disclosure (FVD) auditing model and adds new empirical data to close a gap in the auditing literature. It adds to the limited and inconclusive audit price studies already available by examining the post-implementation of FVD. This research gives current empirical facts on the consequences of adopting an FV model in Jordan for policymakers and standard setters. Additionally, this investigation adds by offering information on the factors that influence audit fees for both auditors and clients. The findings provide regulatory authorities with information on observing and regulating the audit vocation as well as on auditing FVD activities.

Keywords: fair value accounting; abnormal audit fees; audit pricing; auditing fair value disclosures; Amman stock exchange; Jordan (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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