Author:

Keywords:

auditor choice, nonprofit

Abstract:

From 2006 onwards very large Belgian nonprofit organizations (NPOs) are legally required to appoint an external auditor. In this context we investigate whether auditor choice in favor of a sector expert is associated with NPOs’ expectations regarding six auditor attributes: competence, working relationship with the NPO’s management, audit fee/tender, practical execution of the audit, client focus and sector expertise. As sector expertise is acknowledged to improve audit and financial statement quality, insight into NPOs’ behavioral choice criteria is relevant. We find that NPOs are more likely to choose a sector expert if they attach higher importance to an auditor’s sector expertise, client focus and working relationship with NPO’s management. NPO’s are less likely to choose a sector expert if they care more about the practical execution of the audit.