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

Shifei Chung
Rowan University

Ramesh Narasimhan
Montclair State University

Abstract: The purpose of this study is to examine the benefits and costs of statutory or mandatory audit requirement for small public companies in world markets. In some industrialized countries like USA and UK, companies that are defined as small, usually on the basis of sales revenue or number of employees, are exempt from statutory or mandatory audits. The costs of mandatory audits for small companies may far exceed the costs involved. Alternatives to audits such as review reports or compilations may be sufficient in some cases. No previous study has examined whether this alternative is acceptable in countries other than USA and UK, which is the objective of this study. The conclusions reached from this study should be useful for regulators in developing countries to examine alternatives to the mandatory or statutory audit requirements for small incorporated companies

Back to Session Listing

AAA Home Page