幫忙翻譯以下文字,在線翻譯的不要來.急
We examine audit fees in the fiscal year prior to disclosure of internal control deficiencies for a sample of firms that disclosed deficiencies between November 2003 and November 2004, and for a comparison sample that did not report control deficiencies. Our approach differs from studies examining the increase in audit fees as a result of SOX section 404 disclosures (Raghunandan and Rama 2006) in that we use the SOX section 302 disclosures and audit fees in prior periods in an effort to measure the auditor’s response to increased control risk rather than incremental audit fees resulting from the documentation and testing efforts related to SOX section 404.
Our tests indicate that, after controlling for various factors known to affect audit fees (including measures of inherent risk and information risk), audit fees in the fiscal year preceding the year in which the internal control problem was disclosed are significantly higher for ICD firms. The fee effect is economically significant as well, because the average firm pays an additional 35 percent in audit fees when internal control deficiencies are present. Finally, we show that audit fees are increasing in the severity of the underlying internal control problems. Thus, audit firms do seem to increase their fees when control deficiencies exist, particularly in cases where the problems are the most severe. To the extent that audit fees proxy for audit effort — which has been found to be the case in studies with data available for both auditor labor hours and audit fees (Bell, Landsman, and Shackleford 2001; Bedard and Johnstone 2006) — our results suggest that auditors increase their effort in the presence of increased control risk. However, we cannot rule out the alternative explanation that the fee increase is due primarily to a risk premium associated with ICD firms.