Audit fees under the COVID-19 pandemic: evidence from Oman

PurposeThe worldwide spread of the coronavirus disease 2019 (COVID-19) has significant effects on financial markets and companies, causing an unprecedented level of uncertainty in reporting and auditing companies' financial statements. This study explores whether and how COVID-19 affects audit fees.Design/methodology/approachUsing a sample of 268 firm-year observations from the Omani capital market between 2017 and 2020, the ordinary least squares (OLS) regression with a robust standard error is applied to answer the research question of this study.FindingsThe authors find that the pandemic has a significant and positive association with audit fees and abnormal audit fees. This finding suggests that the threat of risk, complexity and legal liability circumstances resulting from the pandemic can be compensated by charging higher audit fees. In addition, the authors provide evidence that Big4 audit firms are those most responding to COVID-19 by charging higher audit fees. Finally, the authors conclude that large companies are less sensitive to the pandemic.Practical implicationsUsers of financial reports and audit firms should anticipate changes in the audit efforts resulting in increased audit fees during COVID-19. Thus, this paper may guide practitioners and businesses in determining the audit fees and associated costs of any potential pandemic.Originality/valueThe study results are among the earliest empirical insights into the effect of COVID-19 on audit fees in Oman.