What Drives Auditor Selection? Free

Over the last decade, tremendous changes have occurred in the environment in which public companies select external auditors. Regulatory changes resulting from the Sarbanes-Oxley Act of 2002 (SOX), consolidation of firms within the public accounting profession, mandated escalation of audit firms' quality control procedures regarding consultation with national firm experts, and increasing financial pressures within audit firms all have contributed to this transformed setting. Perhaps most significantly, SOX requires audit committees to be “directly responsible for the appointment, compensation, and oversight of the work of any registered public accounting firm” (U.S. House of Representatives 2002, SOX Section 301).

A large body of research examined pre-SOX auditor selection (e.g., Eichenseher 1985; Addams and Davis 1994; Hermanson, Plunkett, and Turner 1994; Abbott and Parker 2000, 2001; Addams and Allred 2002). However, changes in audit committee composition and the shift in responsibility for auditor selection from management to the audit committee call for an updated understanding of the factors that impact post-SOX auditor selection. Only limited research on auditor selection has been conducted post-SOX (Beasley, Carcello, Hermanson, and Neal 2009; Cohen, Krishnamoorthy, and Wright 2010; Fiolleau, Hoang, Jamal, and Sunder 2013; Dhaliwal, Lamoreaux, Lennox, and Mauler 2014). Further, this post-SOX research has focused primarily on the role of management influence on the auditor selection process, with little attention paid to other factors, such as audit firm attributes (e.g., partner attributes, firm reputation, services offered) and industry expertise, which pre-SOX research found to impact the selection process.

The objective of this study is to provide a comprehensive, updated overview of the factors that impact public company audit committee members' (hereafter ACMs) selection of external auditors. In addition to variables introduced in pre-SOX research, we examine factors resulting from SOX regulations, including the influence of company management, as well as other factors related to changes in the public accounting profession (e.g., audit firm local office communication with the national office).

In order to fully understand the auditor selection process, our study uses a two-step approach. First, we designed and administered a survey consisting of 15 Likert-scale questions that solicited information from public company ACMs on the importance of various factors in their selection of external auditors. We based the survey questions on both prior research (Hermanson et al. 1994; Behn, Carcello, D. Hermanson, and R. Hermanson 1997; Addams and Allred 2002) and discussions with audit professionals, and included factors such as firm size (regional versus Big 4/national firms), availability of international services, technical expertise, audit firm industry experience, engagement partner attributes, engagement fee, management preference, and whether either management and/or ACMs are alumni of the audit firm. While the survey was intended to elicit responses based upon audit committee members' actual experiences, we acknowledge the possibility that survey bias affected participants' responses in the sense that they may have responded based on how they believe that they should make auditor selection decisions rather than how they actually do make these decisions. Because of the sensitive nature of this topic and the potentially subtle influences of management, which are difficult to capture using surveys, we then conducted field interviews with three experienced public company ACMs to obtain further insights into the survey responses. Our interviews enable us to gather information that is difficult to document using survey or archival data, and they provide further candid insights into the auditor selection process.

Both ACM survey responses and interviews support the importance of an audit firm's reputation for strong industry experience and technical expertise, partner ability to identify and address accounting issues on a timely basis, partner accessibility, partner ability to effectively liaise with the national technical office, and the quality of the written proposal. Although management's expressed preference for a specific firm was only a moderately ranked survey factor, ACMs interviewed clearly acknowledge that management preference influences the audit firm hiring process. While none of the ACMs indicated that it had been necessary to override management preference for an auditor in the past, they all conveyed that the audit committee had the ultimate authority, should that case arise. This finding highlights an important underlying theme that emerged from our research. Specifically, SOX requires audit committees to be responsible for auditor selection but, at the same time, it does not prohibit management input into the auditor selection process—ACMs in our study acknowledge that the auditor selection process does not take place within a vacuum, but rather that management is a source of information in the process.

Our study extends prior research that demonstrates management's influence, and clarifies that ACMs retain sufficient involvement and oversight to be comfortable that, ultimately, they “own” the decision. We also extend pre-SOX auditor selection research by including two additional variables salient to the current environment: the local audit partner's ability to effectively liaise with the audit firm's national technical office, and the local audit partner's ability to identify and address accounting issues on a timely basis. Our survey and interview results indicate that these new variables are among the most important factors in auditor selection, along with previously studied factors such as the audit firm's reputation for technical expertise and industry experience. Additionally, we extend prior research by gaining insight from interviews with public company audit committee members about the relative input of company management into the auditor selection process pre- versus post-SOX. This study's results are useful for audit firms, regulators, and academics. Audit firms can utilize the results to develop more competitive strategies in the request for proposal (RFP) and bidding processes. Regulators can draw upon these results when assessing the effectiveness of current or proposed auditor selection regulations. Academics can utilize results to ensure that their understanding of the auditor selection process accurately reflects current practices.

The remainder of this paper is organized as follows. First, we provide a background review of research on auditor selection. Second, we describe our two-stage research method and then discuss our results. Finally, we offer concluding comments and discuss limitations.

Pre-SOX research on auditor selection generally focuses on how auditor characteristics impact the likelihood of selection. These studies examine predictor variables, including the auditor's industry specialization (Abbott and Parker 2000, 2001; Beasley and Petroni 2001; Addams and Allred 2002), audit firm size (e.g., Addams and Allred 2002) and quality (Eichenseher 1985), audit firm technical expertise, and the quality of audit firm personnel (Hermanson et al. 1994). This research also considered the importance of audit committee characteristics on the audit selection process (Abbott and Parker 2000). However, reflecting typical pre-SOX practices, research conducted during this period examined auditor choice as management's decision.

The need for enhanced auditor independence was among the factors motivating SOX. Central to concerns about independence is the influence of management on the auditors or audit committee at different stages of the audit process. In order to address concerns about the influence of company management on auditor selection, the Sarbanes-Oxley Act (2002) requires that audit committees be “directly responsible for the appointment, compensation and oversight of the work of any registered public accounting firm” (U.S. House of Representatives 2002, SOX Section 301). A decade after the passage of SOX, however, it is clear that concerns persist about auditor independence. For example, the PCAOB recently spent three years strongly advocating the possibility of mandatory audit firm rotation (PCAOB 2011).¹

Public accounting firms have become very different organizations pursuant to SOX. Firms are under more scrutiny than ever because of PCAOB inspections and increased concerns over potential litigation and client loss. Conversations with several audit partners provide anecdotal evidence that, in comparison to the pre-SOX period, client service partners now have less autonomy and are more subject to firm-wide controls, although this is largely undocumented in the audit research literature.² Increasingly, audit firms' quality control procedures require technical issues to be referred to a firm's national technical experts for consultation and, once referred, the process has become more lengthy and bureaucratic.

Research is beginning to provide insights into the post-SOX auditor selection process, with particular focus on the role of company management in the auditor selection process. Evidence from interviews with Big 4 audit managers and partners suggests that, from their perspective, top management still exercises influence over auditor appointments and terminations (Cohen et al. 2010). Archival evidence (Dhaliwal et al. 2014) finds that, even post-SOX, in cases in which members of management were previously employed by a Big 4/5 accounting firm, the firm was significantly more likely to be engaged by the company. This finding suggests that, at least under certain circumstances, management still influences the auditor selection process. While SOX requires that audit committees ultimately make auditor selection decisions, it does not preclude the consideration of management insights.

Fiolleau et al. (2013) use a qualitative research approach to examine the RFP process in order to better understand the “courtship relationship” between auditors, the audit committee, and management that arises as part of the auditor selection process. Results indicate that the RFP process is generally triggered by the SOX-mandated audit partner rotation. Fiolleau et al. (2013) contend that management continues to be the dominant player in the auditor selection process, with auditors focusing on how they can be responsive to management preferences.

In summary, post-SOX research on auditor selection suggests that management continues to have a significant, perhaps dominant, role in auditor selection. While this is an interesting finding, combined with pre-SOX research on other factors impacting the audit process and changes in the audit environment, a more comprehensive understanding of the auditor selection process is called for in order to better understand management's role in the auditor selection process, and whether it is consistent with the spirit of the SOX requirement that ACMs be responsible for the auditor selection decision. We therefore examine additional factors that could impact ACM's auditor selection decisions and consider the influence of the audit committee in the selection process. The new factors incorporated in our survey are the local office audit partner's ability to effectively liaise with the audit firm's national technical office, and the audit partner's ability to identify and address accounting issues on a timely basis. In addition, the interviews, in which we ask ACMs how relative influence has changed pre- versus post-SOX, offer insights into the relative influence of management versus ACMs in the auditor selection process.

To obtain an in-depth understanding of the auditor selection process, we use a two-stage, sequential exploratory approach. Surveys of a large cross-section of ACMs provided an initial understanding of the auditor selection process, and subsequent interviews facilitated a more detailed understanding of issues that surfaced from the surveys (Creswell 2003).

We designed a survey to elicit ACM's views on the auditor selection process. We developed survey questions based on factors posited in prior research to impact audit committee selection of external auditors (Addams and Davis 1994; Hermanson et al. 1994; Behn et al. 1997; Addams and Allred 2002; Fisher and Quick 2004). These factors include proposal quality, audit fees, technical expertise, industry experience, partner accessibility, alumni and personal relationships, availability of non-audit and international services, and audit firm size. In addition to factors drawn from these studies, our survey included items suggested by our discussions with external audit professionals, which include management preference, partner relationship with the national technical office, and a partner's ability to identify accounting issues on a timely basis.³ The survey included 15 Likert-scale questions with a seven-point scale. We asked respondents to indicate whether each factor would decrease (1), increase (7), or have no impact (4) on the likelihood of hiring an audit firm. The survey also included one open-ended question that provided respondents with the opportunity to indicate additional factors that impact the hiring decision.⁴ Table 1 details the 15 Likert-scale survey questions and references their source (the factors that extend prior research are Questions 5 and 6).

We distributed the survey to public company ACMs at a university-sponsored directors' conference and at audit committee roundtable discussions sponsored by a Big 4 firm in three U.S. cities. We also mailed the survey to a random sample of public company ACMs.⁵ The 80 survey respondents have an average of ten years of experience serving on public company boards, eight years serving on public company audit committees, and 24 years working in accounting, auditing, or finance. They serve on an average of 1.5 public company boards. Table 2 summarizes the demographic statistics for the 80 survey participants.

In the study's second stage, we conducted three face-to-face semi-structured interviews with experienced public company ACMs. We designed the interview script (see Appendix A) to elicit further insights into issues raised in the survey responses, as well as to ask additional questions prompted by survey results. In particular, designing interview questions after viewing survey results allowed us to delve deeper into the somewhat surprising survey results on the impact of personal relationships. Additionally, the interview setting provided an opportunity to better understand the relative influence of management pre- versus post-SOX, and to ask ACMs about the factors that precipitate auditor change—the temporal precursor to the auditor selection process. We recorded the interviews and assured all participants that their identity and responses would remain anonymous. Interviews were professionally transcribed, and two of the authors coded the interview transcripts for themes of interest within the framework of the interview script. Thus, we identified overall themes in advance, and additional themes emerged in the coding process. The third author then analyzed the coding to ensure “consistent patterns of theme development among [the] investigators on [the] team” (Creswell 2003, 195).

Table 1 includes a summary of the survey results. Given the seven-point Likert scale used in the survey, a mean response significantly greater than (less than) 4 indicates that the factor is perceived by participants as increasing (decreasing) the likelihood of hiring an audit firm. As reflected in Table 1, many of our 15 factors were drawn from pre-SOX research. While our study is not intended to provide a direct comparison of the relevance of factors pre- versus post-SOX, we discuss how our results compare to those in earlier studies, when appropriate.⁶

To gain further insight into the survey results, we asked a series of interview questions concerning how audit committees decide which firms are invited to propose, how written proposals and auditor presentations are evaluated, and how audit committees make the final decision. From these questions, a number of themes emerged that provide further insights related to the factors indicated as important in our survey. Throughout this discussion, the interviewees are identified as AC1, AC2, and AC3 in the quotes below. In our interviewees' comments, we found a great deal of consistency and did not observe any substantially opposing views.

The survey results reported in Table 1 indicate that nine of the 15 surveyed factors had a mean statistically greater than the scale midpoint of 4.0 (p < 0.01), indicating that they increase the likelihood of hiring an auditor. Five of the 15 factors had a mean statistically less than 4.0 (p < 0.01), suggesting that they decrease the likelihood of selecting an audit firm.

We first examine those factors with means statistically greater than 4.0. While nine factors are in this category, six of those factors stood out (mean greater than 5.5) as strongly increasing the likelihood of hiring an auditor. On a scale of 1 (decrease likelihood of hiring) to 7 (increase likelihood of hiring), mean responses were highest for audit firm reputation for strong industry expertise (mean = 6.74); partner identifies and addresses accounting issues on a timely basis (mean = 6.68); audit firm reputation for strong technical expertise (mean = 6.50); partner is highly accessible (mean = 6.48); partner effectively communicates with the audit firm's national technical office (mean = 5.78); and written proposals are of high quality (mean = 5.68).⁷ We discuss these factors in more detail below.

Audit firm industry expertise (mean = 6.74) and technical expertise (mean = 6.50) are factors that strongly increase the likelihood of hiring an audit firm. These factors frequently are linked to audit quality, and one would expect them to be important regardless of the regulatory environment. Our results are consistent with prior research, including Addams and Davis (1994) and Addams and Allred (2002), who asked CEOs to rate the importance of 12 factors in selecting and switching auditors.⁸ Our study, as well as these earlier studies, ranked both technical and industry expertise in the top 4 factors and placed lesser importance on the quality of the written proposal. Not surprisingly, interviews with ACMs also suggested that industry and technical expertise are necessary for an audit firm to even be considered. For example, one ACM, when asked how audit committees decide which firms will receive an RFP, responded:

Partner attributes also are important factors that increase the likelihood of hiring an audit firm. Specifically, the partner's ability to identify and address accounting issues on a timely basis (mean = 6.68), the partner's accessibility (mean = 6.48), and the partner's ability to liaise with the firm's national technical office (mean = 5.78) all are important. These results are consistent with factors identified as important by audit professionals during our survey development. More broadly, our results are consistent with Behn et al. (1997), who found that partner involvement was key to company controllers' evaluation of audit quality.⁹

Similarly, our interviews support the importance of the audit partner as a factor in the selection process. All ACMs interviewed expressed a preference for a local partner. Beyond just the obvious benefit of greater accessibility, comments focused on how informal networks are more effective for gathering information about the partner, if the partner is known in the local community. If the audit partner's other clients are known, then the audit committee likely will be familiar with the technical issues encountered and company management involved, thereby providing insight into technical expertise and ease of working with the partner.

The ACMs also indicated the importance of a local partner who has political capital in their audit firm, should there be contentious audit issues that are brought to the national technical experts.

It also was clear that audit committees value seamless communication between management and the audit team. Specifically, the ACMs all indicated that company management had a great deal of input into gathering and interpreting information about the audit partner and the audit team.

Pre-SOX research indicates that fees are moderately important in auditor selection, although smaller companies are more sensitive to fees than are larger companies (Addams and Davis 1994; Hermanson et al. 1994; Addams and Allred 2002). Because our survey results indicate that lower audit fees are relatively neutral in auditor selection decisions (mean = 4.6), we asked the ACMs interviewed to comment on this factor. Their responses support our survey findings that fees are not a major factor in the auditor selection decision. All indicated that fees do not drive the decision, although they need to be within the range of comparable firms and can be a “tie breaker.”

Means for five of the 15 survey factors are below the scale midpoint. Given that the survey scale was 1 (decrease likelihood of hiring), 4 (no impact), and 7 (increase likelihood of hiring), a mean survey response significantly below 4 (p < 0.01) indicates that the factor actually decreased the likelihood of hiring an audit firm. Four of the factors below the midpoint relate to pre-existing relationships among auditors, management, and ACMs. These factors include company financial management are alumni of the audit firm (mean = 2.89); ACM or another board member are alumni of the audit firm (mean = 3.05); audit firm members and company financial management have a personal relationship (mean = 2.50); and audit firm members and board members have a personal relationship (mean = 2.75). Thus, survey respondents report that the pre-existing relationships actually deter them from selecting a related audit firm, apparently consistent with the spirit of SOX independence regulations.

Our survey results should be considered in light of previous research examining pre-existing relationships. The Addams and Davis (1994) and Addams and Allred (2002) CEO surveys of factors important to selecting and switching auditors included as a potentially important factor “CPA firm acquaintance with a key employee or member of the board of directors.” Consistent with our survey findings, neither of these pre-SOX studies found that such acquaintances were among the most important auditor selection factors.¹⁰ Conversely, recent archival evidence contrasts with our survey results related to pre-existing relationships with company financial management. Dhaliwal et al. (2014) find that, when company financial management was previously employed by a Big 4/5 accounting firm, the specific audit firm was more likely to be engaged by the company. Given these mixed findings, we focused a number of interview questions on the full scope of possible pre-existing relationships (i.e., relationships among members of company management, board members, the audit firm, and audit firm personnel).

Interviewed ACMs indicate that previous working experiences provide valuable information that may be relevant in their auditor selection decisions. ACM comments indicate that pre-existing relationships are viewed as a means to discern technical ability and ease of working with a partner and audit team. The following comments address how information gleaned from pre-existing relationships can impact the auditor selection process, and simultaneously note the need for transparency and monitoring of such pre-existing relationships.

There are plausible explanations for why our survey results differ from our interview results. Despite instructions to provide responses based upon actual behavior, when given no opportunity to expand on or clarify the role of such pre-existing relationships in auditor selection decisions, surveyed ACMs may have responded as they believed they should under SOX independence regulations. Conversely, interviewed ACMs had the opportunity to explain not only the existence, but also the nature of pre-existing relationships. Interviewees were strikingly candid, oftentimes providing extensive details about specific personal examples supporting their responses to our questions. Having the opportunity to clarify the role of pre-existing relationships may have made interviewed ACMs more willing to acknowledge the role that such relationships play in the auditor selection decision. As reflected in the above quotes, interviewed ACMs acknowledge that pre-existing relationships are an important source of information. More information is available if management or audit committee members have had previous working (or other) relationships with audit partners. Put another way, what the interviewed ACMs may not have realized is that this additional information may subconsciously bias decisions in favor of firms where there is a pre-existing relationship.

Survey results indicate that management preference for the selection of a specific audit firm is a fairly neutral (although statistically significant) factor (mean = 4.7). Our interviews indicate that, while management preference would not sway the audit committee's decision, the reality and necessity of having management as an active partner in the auditor retention and selection process exists. The practical need for the auditor selection process to really be a three-way relationship is reflected most clearly in ACM responses to the following question: “If you think the auditor selection process was 100 percent driven (or significantly influenced) by management pre-SOX, where would you put it now?”

In the survey, we did not ask ACMs about the motivation for auditor change. Rather, the survey asked, given that an audit is up for bid, what factors are considered in auditor selection. To deepen our understanding of the motivation for auditor change, we designed our first interview question to ask what factors impact a company's decision to put their audit up for bid. Responses from all interviewed ACMs clearly convey that the decision to change auditors is a complex one that is driven by a multitude of factors. All interviewed ACMs mentioned that a necessary condition was management's dissatisfaction with the relationship with the auditor. For example:

Regarding the types of issues that can create tension in the relationship, two ACMs stated that the most common source of dissatisfaction with the existing auditor related to the three-way relationship between the local engagement partner, the company, and the audit firm national technical office. They specifically cited poor and untimely communication between the local office partners and the firm's national office technical experts on how contentious accounting issues should be handled. One ACM's comments also suggested that it can create problems when an engagement partner attempts to position himself as an advocate for management without first aligning the local office view on accounting issues with the firm's national technical office.

All ACMs interviewed mentioned that it was more common to actually put an audit out for bid when dissatisfaction coincided with changes in the audit partner (generally because of PCAOB mandated rotation). There also was unanimous acknowledgement that the length of auditor tenure may precipitate audit committee discussions about whether it is time for the audit to go out for bid.

However, it was clear from all interviews that auditor tenure alone was not sufficient to put an audit out for bid. ACMs indicated that there was no value to the RFP process if in fact they were satisfied with the service received from their existing auditors. As one ACM stated:

The overall objective of this study is to provide educators, regulators, and audit firms with a better understanding of the post-SOX auditor selection process. In the first part of a two-stage approach, we designed and administered a survey soliciting information from public company ACMs regarding the importance of factors in the auditor selection process. In addition to factors drawn from prior research, we incorporated the following new factors into our survey: the local office audit partner's ability to effectively liaise with the audit firm's national technical office and the audit partner's ability to identify and address accounting issues on a timely basis. In the second stage of our approach, we further extend prior research by gaining insight from interviews with public company audit committee members about the relative input of company management into the auditor selection process pre- versus post-SOX. The survey and interview results both imply that the most important factors affecting the auditor selection decision are the audit firm's reputation for strong industry experience, the partner's ability to identify and address accounting issues on a timely basis, the audit firm's reputation for strong technical expertise, partner accessibility, partner ability to effectively work with their national technical office, and the written proposal quality. Results from the interviews emphasized further the importance of the local partner having an effective relationship with the national office.

While survey respondents indicate that ACMs are less likely to hire audit firms with which pre-existing relationships exist, interviewees indicate that they use their professional and personal relationships to glean information about the audit team and the audit partner's ability to deal with the national office. One interpretation may be that, when pre-existing relationships are present, the availability of more information about the audit personnel and firm may unconsciously bias ACMs toward that firm. Our results further make it clear that auditor selection continues to be a shared process between management and ACMs, although the ACMs acknowledge their ultimate responsibility for the decision. While management does not (and should not) drive the process, audit committees rely on management to help inform the process.

Insight into the auditor selection process gleaned from this study can assist regulators in assessing the effectiveness of current or proposed auditor selection regulations. Our findings can also provide audit firms with an increased understanding of the factors valued by companies and ACMs in the auditor selection process. This in turn may help audit firms develop more competitive strategies in the RFP and bidding processes. Academics can use these results to ensure that their understanding of the auditor selection process accurately reflects current practices. Our results further provide insights as to how pre-existing relationships are still influencing the auditor selection process.

Results of this study are subject to several limitations. First, despite obtaining over a 50 percent response rate to surveys administered in person to public company ACMs, surveys sent to a random national sample of ACMs yielded only a 5 percent response rate. Although face-to-face survey administration occurred in cities of various sizes in the Western U.S., it is possible that our results are geographically biased. Second, while the survey language was intended to direct respondents to their actual experiences, we acknowledge the possibility of survey bias in that participants may provide responses that they believe to be the correct answer regardless of whether that is actually how they make auditor selection decisions. Third, while the three interviewed ACMs were quite consistent in their views, a larger sample may have yielded more diverse perspectives. Finally, while the public company ACMs appeared to be quite candid in their responses, all responses are limited by their ability to self-reflect on their own decision processes.

• 1. 

  What factors impact the decision to put the audit up for bid?

• 2. 

  What is the process for determining the audit firms you will approach for an RFP?

• 3. 

  To what extent does the auditor's “courting” of you influence whether that firm is given an opportunity to bid on the audit?

• 4. 

  Are the RFPs sent by management or by the audit committee to the prospective audit firms?

• 5. 

  What informational items do you request in the RFP?

• 6. 

  How do you assess the audit firm's ability to deal with the SEC-related issues?

• 7. 

  In your experience, what makes a proposal more or less effective?

• 8. 

  How would you characterize management's involvement in the RFP process?

• 9. 

  How important is the presentation? In what ways have you seen it influence your decision?

• 10. 

  Does the audit committee excuse management to meet alone with the prospective audit firm?

• 11. 

  Do you use a formal scorecard for making an assessment?

• 12. 

  Are the internal auditors involved in the selection process?

• 13. 

  What consideration do you give to Big 4 versus a regional firm?

• 14. 

  How do you evaluate the incumbent auditor (if the incumbent is asked to propose)?

• 15. 

  How do you evaluate industry experience and technical expertise?

• 16. 

  How much weight do you put on permissible non-audit services offered by the firm?

• 17. 

  How much is your decision influenced by colleagues' experiences with the audit firm?

• 18. 

  Do you consider firm publications and seminars/workshops offered by the firm as a sign of quality?

• 19. 

  How do you gather information about the audit partner? Do you talk with the partner prior to the presentation?

• 20. 

  How much consideration is given to whether the partner is local?

• 21. 

  What is relevant to you when looking at the proposed engagement team? Is focus just at the partner level? How much is the relationship partner considered in the decision-making process? How do you perceive Directors?

• 22. 

  How much is your decision influenced by colleagues' experiences with the audit team?

• 23. 

  Do some firms have a reputation for having better or worse continuity of engagement teams?

• 24. 

  Is the diversity of the audit team considered in the deliberation?

• 25. 

  How do you consider independence issues between the auditors and company management?

• 26. 

  What role do fees play in the selection process?

• 27. 

  How do you perceive outliers that propose fees much higher or much lower than the other firms?

• 28. 

  Would you consider a lower fee that specified greater utilization of internal auditors and less external auditor time?

• 29. 

  If you think pre-SOX, the auditor selection process was 100 percent driven by management, where would you put it now?