What to provide and how to provide it?: - a study on small companies' demand for audit and alternative services
Independent thesis Advanced level (degree of Master (Two Years)), 20 credits / 30 HE creditsStudent thesis
The 1st of July 2010 is the statutory audit going to be abolished in Sweden. After the abolition 96 % of the limited companies do not have to conduct an audit. This research will therefore study the small companies’ demand for audit and alternative services, and how the services shall be provided to best align with the clients’ demands.
This study will be conducted with a positivistic perception of knowledge, since the aim is to explain what factors that affect the companies’ demand. With starting points in previous studies a deductive approach have been chosen. The theoretical framework consists of basic theories regarding audit; agency theory is its connection to audit. Then audit demand has been discussed, internal and external aspects; demand from external owners, banks, attitudes toward audit, company size, cost of audit. Then alternatives to a statutory audit have been discussed; audit interval, alternative services, assurance services, a review, and compilation engagements (a type of services which is based of accounting data) and joint-provision of services (a package of services).
A quantitative study has been conducted via a postal questionnaire, which was sent to 395 companies in Västerbotten County that have:
- 10-50 employees
- 3-41.5 MSEK turnover
- 83 MSEK balance sheet total
The results from the analysis show inconsistent results with previous studies, a few factors show significant evidence of affecting the demand for audit in the full model tests, attitude towards audit and the prize. A few more factors show evidence in the individual tests; external owners and company size. The lack of impact of the demand from banks is remarkable findings.
As there is a demand for audit, 80 % of the companies, and alternative service, (about 50 %), conclusions have been drawn that audit firms should consider providing these alternative services. Since the choice of conducting an audit will be voluntary the audit interval might differ from today. The alternative services could be used the years that an audit is not conducted. As 60 % of the companies uses more services besides audit, and 40 % have a demand for a package of services the audit firms should consider providing the services in this way. This would create a win-win situation for all parties, since the clients will get the services to a lower price and the audit firms could probably retain more of their clients.
Place, publisher, year, edition, pages
2010. , 121 p.
statutory audit, audit demand, alternative services
IdentifiersURN: urn:nbn:se:umu:diva-35196OAI: oai:DiVA.org:umu-35196DiVA: diva2:337773
UppsokSocial and Behavioural Science, Law
Svanström, Tobias, Universitetslektor
Nilsson, Kerstin, studierektor