An International Meeting of the American Accounting Association American Accounting Association 2006 Annual Meeting August 6–9, 2006 Washington, D.C.

Stefanie L. Tate
University of New Hampshire

Abstract: As a result of the recent frauds and the passing of the 2002 Sarbanes Oxley Act, more focus has been placed on the role of independent auditors in monitoring corporations. While the new rules are not directed toward non-profit organizations, these organizations face many of the same monitoring concerns as their for-profit counterparts. Given their large reliance on public support, it is imperative they maintain adequate levels of monitoring. This study looks at non-profit organizations' auditor choice decisions – the factors associated with their decision to change auditors and the factors associated with the auditor selected if a change is made. I find changes in operational structure, financing, management’s reputation and contracting, and audit fee are all significant in determining whether an organization will change auditors. In addition, changes in operational structure and financing appear to have some effect on the type of auditor selected when a change is made.

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