Abstract:
The study sought to find out the determinants of audit fees in Kenya, this was informed by the fact that most
literature on audit fee models relates to developed countries while little attention has been given to developing
countries like Kenya. Previous research has found the significance of the audit fee variables change according to
each country’s characteristics and period of analysis; such models therefore need to be revised periodically.
Deductive approach was used in the study. Data was collected from listed firms’ annual reports covering the
period from 2008 to 2014. Out of the 62 listed firms targeted by the study, 41 firms were responsive
representing a response rate of 66.12%. Linear regression model was used to test the hypothesis. The R square
of the model was 0.709 meaning that 70.9% of the variations of audit fees are explainable by the model studied.
F-statistic value of 67.273 and p-value (sig) of 0.000 indicates the model is statistically significant and can be
relied to predict audit prices. The findings of the study support a link between Audit pricing and: Auditor
Experience, Auditor Reputation, Big 4 status; Client size; Client complexity; and the reporting time lag are the
important factors determining audit fees for Kenyan listed firms. A negative relationship was found between
audit fees and auditor size while no relationship was found between audit fees and: reporting season, client
profitability, and client risk.
