Abstract:
Limited liability companies in Sri Lanka are statutorily required to secure the services
of an auditor in order to obtain a professional opinion on their financial statements.
The usefulness of an external audit in enhancing the credibility of financial statements
depends on the quality of audit services being provided. This study sets out to
examine the factors that may influence external audit fees paid by the Sri Lankan nonfinancial
companies listed on Colombo Stock Exchange (CSE). Specific attention is
focused on the investigation of the potential influence of corporate size, profitability,
corporate risk, corporate complexity, sector classification, external audit report lag,
audit committee independence, status of the audit firm on audit fees. Data used in this
study are mainly collected from 2013 until 2017 annual reports published by the Sri
Lankan non-financial companies listed on Colombo Stock Exchange. The sample
which contains 50 numbers of companies and total observation is 250. Data were
analyzed using regression model with an ordinary least squares (OLS) technique over
E-Views package. The findings pointed that there is a significant and positive
association between audit fees and each of corporate size, company’s profitability,
risk and audit committee. A significant and negative relationship has been detected
between business complexity and external audit fees. The findings also revealed that
audit fees are not significantly associated with, industry type, status of audit firm and
audit report lag
