Impact of client information technology applications on audit fees

Based on a sample of Chinese listed firms, this paper investigates the relationship between enterprise information technology (IT) applications and audit fees. Our findings indicate that IT adoption significantly reduces audit fees. This effect is more pronounced among firms with higher levels of inventory and accounts receivable, as well as those audited by the Big Four or by firms that specialize in digital auditing. Further analysis reveals that IT primarily reduces audit fees by lowering auditors' required audit effort. Additionally, IT applications do not have a significant impact on audit risk, audit quality, or the effectiveness of internal control systems. These results remain robust when alternative measures of IT are employed and when potential endogeneity concerns are addressed.