Audit quality of the first part

Audit quality of the first part

The audit quality of the first part, we want to express in several parts.

Factors affecting audit quality

1. Audit institutions

Auditors work for auditing firms.

And the result of the audit process is the audit report.

which is issued in the name of the audit institute and along with the audited financial statements of the employer.

And it can be seen as the joint output of the employer’s inputs and audit judgments. (Gibbins et al., 2010)

It is audit institutions that hire audit staff.

They teach and design audit programs and tests.

and use compensation and other organizational policies as guidelines for the evidence gathering process.

Audit institutions design and implement internal administrative structures in order to ensure the quality and compliance of their audit policies.

Therefore, audit institutions are the target of audit quality criticism.

The characteristics of audit institutions and their relationship with quality have been examined in various researches.

Francis (2004) has reviewed the literature formation of these studies by dividing small and large institutions.

One of the main sources of difference between audit institutions is the institution’s expertise in a specific industry, which was investigated in researches.

that the group of clients of the auditing institute was used as a measure of the expertise of the institute in a specific industry.

Institutions with a large number of their owners working in a particular industry were known as handling specialists in that industry.

Francis (2011), in his research, concluded that the size of audit institutions and not specialization in a specific industry is the main driver of audit quality.

2. Audit institutions

The two main inputs in the audit process are the people of the investigation team and the audit tests that are conducted in order to gather evidence.

The quality of the audit increases when the work is assigned to competent people.

While it may be reasonably assumed that auditors’ qualifications are determined by general education requirements and professional certifications.

But the fact is that there is very little recognition of people who do audit work.

Also, despite the fundamental importance of audit evidence (the second input in the audit process), in the field of audit quality, knowing about it is not enough.

Reliability and relevance of collected evidence are two important issues that must be recognized.

For example, taking the confirmation of accounts receivable is one of the tests that are required according to auditing standards.

But the results of several studies have shown that this test does not necessarily provide reliable evidence for auditors (Francis, 2011).

3. Audit process

The audit process shows how to use audit inputs.

The audit process includes decisions and judgments that auditors make in relation to planning, gathering evidence, and interpreting evidence in order to meet the broad requirements of auditing standards.

to provide sufficient and reliable evidence to support their opinion.

The researches conducted in the field of audit process are based on economic principles.

And they have considered the audit process as a production function.

Their goal is to understand the inputs of the production process (working hours and handling group), the efficiency of these inputs and their substitution in different audit conditions (Francis, 2011).