We found a match
Your institution may have access to this item. Find your institution then sign in to continue.
- Title
The Cost of Compliance: FIN 48 and Audit Fees.
- Authors
Erickson, Matthew J.; Goldman, Nathan C.; Stekelberg, James
- Abstract
Effective for fiscal years beginning after December 15, 2006, FIN 48 significantly altered uncertain tax benefit (UTB) recognition and disclosure requirements relative to its predecessor standard, FAS 5. We examine the effect of the new standard on audit pricing. We first document that UTB-related audit fees increased following the implementation of FIN 48. However, we also find that this increase is primarily driven by a spike in the audit pricing of UTBs in 2007. Indeed, we find that the audit pricing of UTBs in the 2008–2012 period is not significantly different from that of the 2002–2006 period. We interpret these results to indicate that although firms incurred significant FIN 48 implementation costs, the ongoing audit pricing of UTBs under FIN 48 is similar to that of FAS 5. Our findings suggest that any potential benefits of FIN 48 may outweigh associated costs related to a temporary increase in audit fees.
- Subjects
UNITED States; TAXATION; AUDITING fees; ACADEMIC accommodations; ACCOUNTING; STANDARD deviations
- Publication
Journal of the American Taxation Association, 2016, Vol 38, Issue 2, p67
- ISSN
0198-9073
- Publication type
Article
- DOI
10.2308/atax-51323