دارایی های نامشهود در ترازنامه و هزینه های حسابرسی Intangible assets on the balance sheet and audit fees

Introduction There has been a steady increase in the proportion of intangible assets on the balance sheets of American companies over the last several decades (Calcbench 2016). Nakamura (2008) notes that investment in intangible investment expenditures have risen from roughly 4% of U.S. GDP in 1977 to 9–10% in 2006. Given this increase in significance of intangible assets, a growing literature addresses how investors and regulators respond to this changing composition of the corporate balance sheets (Lev and Gu 2016). This study addresses how an important monitor of financial reporting, namely the auditors, view the presence of intangibles on the balance sheet. Though the issues involved in accounting for intangible assets are similar to those of property, plant, and equipment, an important difference is that the future benefits attribute to intangible assets are usually much less certain than those attributed to tangible assets (Spiceland et al. 2017). U.S.GAAP generally allows companies to record acquired intangibles at purchase price but does not allow capitalization of costs incurred on internally generated intangibles with the exception of legal and filing fees.1 Auditing of intangible assets poses a different set of challenges than auditing of tangibles assets such as property, plant, and equipment. On the one hand, tangible assets need physical verification which may be time consuming and costly. In contrast, intangible assets do not require extensive physical verifications. On the other hand, it may be relatively easier to ascertain the values of tangible assets while for some intangible assets that are especially complex such as goodwill, valuation is much harder as there is considerable discretion involved. (Ramanna and Watts 2012). Thus, whether auditors would perceive the auditing of intangible assets as involving more effort and more risk compared to other assets is an empirical question. The study uses a sample of firms from COMPUSTAT and Audit Analytics over the period 2010–2015 and finds that audit fees are higher for firms with a large proportion of intangible assets on the balance sheet. This result holds for both goodwill and other intangible assets. This relationship is more pronounced for firms with high book to market ratios indicating that auditors may perceive these firms to be of higher risk for overstated values. Although the economy is becoming more knowledge based and thus the importance of intangible assets has significantly increased, relatively few papers have studied how auditors view the growth of intangible assets on the balance sheet (papers that relate to this area include Shipman et al. 2016 who study the relationship between goodwill impairment and fees; Krishnan and Wang (2014) who study the relationship between software development costs and audit fees). Moreover, the Public Company Accounting Oversight Board (PCAOB) notes significant deficiencies in audit of intangible assets (PCAOB 2015). This study contributes to our understanding of this important area. The study also contributes to the literature on determinants of audit fees, by documenting the composition of assets to be another significant factor in determination of audit fees. In addition, the study shows that valuation of assets to be an important factor in the relationship between audit fees and intangible assets.