Different Perceptions of Audit Quality

Introduction: Audit quality is in fact a complex and multi featured concept and is when the auditor’s opinion on a report can be relied upon. The auditors are primarily responsible for performing quality audit and it is best achieved when there is support from others in the financial reporting chain. (IAASB, 2014)

The quality audit is likely been achieved by the engagement team which,

• Have adequate experience, knowledgeable and skilled people who work within the allotted time and demonstrate proper ethics, value and attitude.

• Comply with laws and regulations and apply the audit process and control procedures when ever applicable and provide useful and timely reports. (IAASB, 2014)

There are different perceptions of audit quality by an investor and by the members of the audit committee. The investor looks through the auditor reporting, the reputation of an auditor and last the expectation of an audit. On the other hand, the member of the audit committee seems to check the quality of an audit, the process of an audit and last the interactions and communication of an auditor (International Federation of Accountants, 2014). Each of the measure is quantitative. To measure the level of relevance the operational inputs and audit processes is tested against the audit results. Certainly, these input and processes measures may prove to be redundant, or have a low correlation among others with the high quality audit results. Therefore, audit quality involves audit firms transparency, audit independence; regulated by global standards, audit documentation and evidence. (Public company accounting sighting overview, 2013).

Inputs: They are categorized at engagement, firm and national level with the audit firm’s culture (values, ethics a...

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...ed. Each stakeholder plays an important role in supporting high-quality financial reporting. The way the stakeholders interact can also impact the audit quality. (Institute of Chartered Accountants Australia, 2014)

Context: It is the legislative and regulatory environment within which the audit operates. It includes the financial reporting framework and corporate governance environment which impacts on the financial reporting quality either directly or indirectly. (Australian Public policy Committee, 2014)

The framework balances the responsibility for the completion of an audit. The auditors and the regulators who are known to have a close connection with the audit process will find the framework to be more relevant when in practice. It likely enhances the interaction between users of financial statement and auditors, management, governance and audit regulators.