The audit profession has been highly scrutinized among researchers and regulatorsrnfollowing the fall of giant companies in the West. One of the issues that gainedrnmomentum has been to analyze the audit fee structure and the various auditor-clientrnrelationships. This study investigates the determinants of audit fees based onrnvariables that are unique to the banking firms and considered important by regulatorsrnin a sample of Ethiopian commercial banks. The study also examined whetherrnauditors take in to account factors considered important by the regulatory bank whichrnresult in better alignment of both the interests of auditors and the regulatory bank.rnFurthermore, the study investigates whether abnormally higher audit fees reduce thernaudit quality. The study used a panel data for eight commercial banks form the yearrn2004-2012. The panel fixed effect regression result revealed that bank size, liquidity,rnefficiency, loan growth, capital adequacy and auditor size are the main determinantsrnof audit fees for the Ethiopian commercial banks. With regard to the factorsrnconsidered important by the regulatory bank, auditors do not seem to consider creditrnrisk in the determination of audit fees. In relation to the audit quality, the study failedrnto find any significant relationship between the extent of earning managementrnthrough Loan Loss Provision and abnormal audit fees. This leads to conclude thatrnauditors do not seem to compromise audit quality for the sake of securing abnormallyrnhigher audit fees. The researcher recommends auditors to further align their audit feernvaluation with the interests of the regulatory bank particularly in respect of creditrnrisk.rnKey words: audit fees, regulatory risks, audit quality, earning management, Loan LossrnProvision