External Environment and the Pricing of Audit Services: A Systematic Review of Archival Literature

Client- and auditor-related attributes are well-documented and often synthesized determinants of audit pricing. Particularly in recent years, the audit fee literature has undergone rapid growth in empirical archival research regarding the effect of external environmental factors on audit pricing. We extend the framework of audit fee research by adding a novel structure — a PESTLE analysis. We provide a systematic review of the literature on external environmental factors and audit pricing and suggest opportunities for future research. Our review reveals that audit researchers particularly consider legal factors in terms of regulatory changes, together with increased attention on political, economic, and social factors. Areas that remain under-researched include technological and environmental/ecological factors, despite coming under increased public scrutiny. Overall, our review demonstrates the importance of considering the external environment to form a more complete picture of the audit pricing framework and to understand global and regional variations in auditing.