Audit Quality Indicators: Experience Level and Firm Size Differences in Perception

• In Event: Continental Breakfast - Research and Education Forum
  In Roundtable Session: Table 10: Audit Quality Indicators

Abstract

This study seeks to identify differences in audit quality among auditors by soliciting auditors’ perceptions auditors regarding inputs and processes indicators. As part of its 2012-2016 strategic plan, the Public Company Accounting Oversight Board (PCAOB or the Board) instituted a project that emphasizes defining audit quality, developing an audit quality framework, and generating examples of audit quality indicators (AQIs). The PCAOB states the project is needed as (1) there is no universal foundation for audit quality measures; (2) AQIs may help focus audit committees and investors on audit quality, help firms improve audit quality, promote helpful research, and inform PCAOB policy; (3) an urgency for progress given economic conditions; and (4) there exists momentum and window of opportunity for AQIs. As such, the PCAOB has offered a tentative, developing list of AQIs for consideration and expects to publish a Concept Release in the near future to obtain feedback on these AQIs and acquire suggestions for additional/different AQIs. The PCAOB has suggested soliciting input of auditors via a survey regarding AQIs. This study supports the PCAOB’s efforts. Our results from 99 practicing auditors at all experience levels, and from Big 4 and non-Big 4 firms, indicate significant differences on several indicator items

Authors

• Veena L. Brown, University of Wisconsin–Milwaukee

• Jodi Lynn Gissel McDowell, Marquette University