The effect of revaluation of assets on audit fees

Abstract

In the recent years, many companies in the Tehran Stock Exchange, TSE, revaluated their non-current assets and increased their capital value to do reforms in their financial structure and to exit from the inclusion of Article 141 of the Commercial Code. This, with regard to the inflation condition in the community, often increases firms’ capital values and changes financial statements that may cause auditors revalue their audit fees. This study aims at investigating the effects of revaluating non-current assets on audit costs of firms. In this study, a sample of 127 companies listed in the TSE was selected, in which 62 companies revaluated their non-current assets and 65 companies held their own historical value of non-current assets unchanged, all in the period 2010 to 2016, and then, the data was collected from financial statements of these companies. Findings showed that revaluation of assets leads to increase in audit costs. Also, the companies that reevaluate their own assets, compared to other companies, experience more audit costs.

Keywords

• audit fees
• business law
• revaluation of assets
• tehran stock exchange