Abstract:
Tanzania has witnessed the growth in the auditing industry spearheaded by the
mandatory requirement of having audited financial reports to all businesses for the
consumption of stakeholders including the Government. Despite such growth and
the need for auditing services, auditing firms have remained to be in small size
category while few are found in the medium size and fewer in the large size firm.
The aim of this study was to analyse the determinants of auditing firms’ growth in
Tanzania while using Arusha and Kilimanjaro regions as a case study. The study
used primary data collected through questionnaires administered in a sample of 99
respondents, including 33 Auditors, 33 Managers and 33 Partners. The study used
Multinomial Logit Model (MNL) since the dependent variable had multi category
choice outcomes (polychotomous). Findings revealed that financial capacity,
regulatory framework, managerial capability and staff competency were
statistically significant and therefore prerequisites in the growth of auditing firms.
The study recommends that NBAA employ regulations that will support small size
auditing firms graduation to subsequence categories i.e. medium and large sized
firms, also small auditing firms should think of merging in order to bring together
financial, staff and managerial resources which are better enjoyed with large scale
firms as evidenced by the four (4) big auditing firms of PwC, KPMG, Deloitte and
EY.
