The article discusses the study of determining whether audit risk model is descriptive of what occurs in the auditing practice or if the relationship between fees and internal control deficiencies (ICDs) suggest that audit enterprises exert more effort in auditing firms that impart ICDs. The study examines the internal controls over financial reporting (ICOFR), generally accepted accounting principles (GAAP), audit risk model, audit fees and sections of Sarbanes-Oxley Act. The study found out that audit fees are significantly higher for firms disclosing material weakness.
Canadian Academic Accounting Association
Hogan, C.E., & Wilkins, M.S. (2008). Evidence on the audit risk model: Do auditors increase audit fees in the presence of internal control deficiencies? Contemporary Accounting Research, 25(1), 219-242. doi: 10.1506/car.25.1.9
Contemporary Accounting Research