This study analyzes the relation between auditors’ perceived abnormal audit hours and audit fees to determine whether audit firms or their clients bear the expected costs of business risk or audit risk. Auditors perform risk assessment procedures to support their decisions regarding audit client and its business, audit planning, and audit pricing. Similarly, the production function model of audit fees (Simunic 1980) suggests that auditors will charge more audit fees for external audit services when the audit risk are higher. In that regard, we predict that the auditor’s perceived abnormal audit hours are increasing in business risk or audit risk. Thus we expect that auditors will recover the cost of business risk or audit risk by adjusting the price of audit service. That is, we predict that there is a positive association between auditors’ perceived abnormal audit hours at the client level and audit fees. Because auditors’ perceived abnormal audit hours is a direct proxy of auditor effort, it should be associated with audit fees. To this end, we measure auditors’ perceived abnormal audit hours by both the difference between expected audit hours for the current term minus actual audit hours for the prior term and the difference between expected audit hours for the current term minus expected audit hours for the prior term. Using 7,117 observations from 2008 to 2013 in KOSPI and KOSDAQ listed firms, we test the relation between auditors’ perceived abnormal audit hours and audit fees. Findings of this paper are follows. First, we predict and find a statistically significant positive relation between audit fees and auditors’ perceived abnormal audit hours. In other words, we find evidence that the auditors’ perceived abnormal audit hours of client firm are increasing audit fees in the presence of high business risk or audit risk. Second, our additional results show that the positive relation between auditors’ perceived abnormal audit hours and audit fees in Big 4 auditor’s samples and Pre-IFRS period is more than Non-Big 4 auditor’s samples and Post-IFRS period. Understanding how the auditing profession’s risk management and pricing practices changed in response to the significant events of recent years is important to researchers, audit firms, audit clients, investors, and regulators. The significant association that we find between audit fees and auditors’ perceived abnormal audit hours adds to the evidence in prior literature that audit fees are adjusted in response to risks faced by the auditors. Therefore, this paper provides some initial insights into the relation between auditors’ perceived abnormal audit hours and the structure of audit fees. In particular, this study documents a statistically significant positive association between auditor auditors’ perceived abnormal audit hours and audit fees. More importantly, we also demonstrate that a commercially developed, comprehensive risk of audit measure serves as an effective proxy for auditors’ perceived abnormal audit hours that can be used in future audit research.