Federal Government Contracting and Audit Fees

Qing Burke worked on a co-authored paper with Sydney Shu to investigate the relation between federal government contracting and audit fees. Using the rich details in US government procurement data, the study investigates auditor responses to clients receiving government contract awards by examining audit pricing decisions. The study documents a positive relation between audit fees and government contracts among a large sample of companies, the majority of which do not rely on government purchases as a major revenue source. Findings also suggest that auditors incorporate both contract size and contract characteristics in the assessments of engagement risk arising from client noncompliance in government contracting.