Understanding Assurance in the Australian Self-Managed Superannuation Fund Industry

Using proprietary data, this study examines auditor industry specialisation, professional brand effects and non-audit services (NAS) in the self-managed superannuation fund (SMSF) sector, the fastest growing and largest segment of the Australian $1.75 trillion retirement savings industry. We consider the impact of industry leadership for a large sample of SMSF audits for the three years to June 2010. After controlling for factors known to determine audit fees, we find evidence of fee discounting for the leading suppliers of SMSF audits, consistent with Simunic (1980)'s assertion of competition in the small audit client market. When considering the impact of professional affiliations, we find that registered company auditors and members of professional bodies who comply with auditing and ethical standards receive a fee premium. In terms of auditor independence, the supply of NAS is shown to improve the auditors' ability to report breaches, suggesting no independence concerns arising from joint supply of audit and NAS in this setting