Independent audit quality
Independent audit quality
Independent audit quality
Audit quality has various definitions.
In the professional literature, audit quality is defined in terms of compliance with relevant auditing standards.
In contrast, professional accounting researchers consider multiple dimensions for audit quality.
And these dimensions often lead to definitions that look different.
The most general definitions of audit quality include the following important issues:
The possibility of major errors in the financial statements that the auditor can discover and report.
The possibility that the auditor will not issue a conditional report for financial statements containing significant errors.
A criterion for the auditor’s ability to reduce biased mistakes and distortions and improve the quality of accounting data.
The accuracy of the information about which the auditor has issued a report.
The aforementioned definitions include different degrees of competence and independence dimensions of auditors in conducting audits (real independence) as well as how users perceive their independence.
(Alavi Tabari et al., 1388).
The most common definitions of audit quality from the perspective of researchers are as follows:
From D’Angelo’s (1981) perspective, audit quality is “the market’s assessment of the likelihood that the auditor will first detect material misstatements.”
and secondly, to report the discovered distortion.
This definition is based on the assumption that users’ understanding of audit quality (market inference) represents the actual audit quality.
Titman and Truman (1986) have defined the quality of the audit as the accuracy and correctness of the information that is provided to the investors after the audit.
Palm Rose (1988) defines audit quality in terms of auditor crediting.
Since the purpose of the auditor is to create confidence in the financial statements.
Therefore, audit quality means that the audited financial statements are free from significant distortions.
In fact, this definition emphasizes the audit results.
That is, the reliability of the audited financial statements reflects the high quality of the audit
it does.
This definition leads to the following questions:
How users evaluate the reliability of audited financial statements
they do?
This definition of audit quality is based on audits performed.
Because the assurance level of the audited financial statements cannot be determined before the audit.
As a result, the definition of Palm Rose (1988) emphasizes the real quality of the auditor.
Davidson and New (1993) consider audit quality as the auditor’s ability to detect and remove significant misstatements and detect manipulation of net profit.
Lam and Chang (1994), state that audit quality should be defined for each audit work separately (separated by services performed).
Because the auditing firm may not perform all its audits at the same quality level.
. The provided definitions do not cover many factors affecting audit quality
Audit quality is a complex concept and cannot be limited to a simple definition (Boner, 2008).
To provide quality services, auditors must provide a report that best evaluates the creditworthiness of financial statements.