Understanding Audit Quality: Insights from Audit Professionals and Investors

Projects seeking to define, measure, and evaluate audit quality are on the agendas of auditing standards setters as well as audit firms. The Public Company Accounting Oversight Board (PCAOB) currently provides information regarding audit quality through the release of inspection reports, and the Board intends to establish and report audit quality indicators. To provide additional perspective on audit quality, we obtain auditors' and investors' views, definitions, and indicators of audit quality. We find that investors' definitions of audit quality focus more on inputs to the audit process than do auditors', and that investors view the number of PCAOB deficiencies as an indicator of overall firm quality. We find a consensus that auditor characteristics may be the most important determinants of audit quality, and that restatements may be the most readily available signal of low audit quality. We relate responses to a general audit quality framework, provide support for archival audit research, and identify additional disclosures that participants suggest could signal audit quality. Taken together, we provide evidence regarding the construct of audit quality in the post†SOX environment, evaluate many of the audit quality indicators proposed by the PCAOB, and suggest avenues for future research.Des projets visant A dA©finir, mesurer et A©valuer la qualitA© de l'audit figurent au programme des instances de normalisation en matiA¨re d'audit de mAame que des cabinets d'audit. Le Public Company Accounting Oversight Board (PCAOB) produit actuellement de l'information au sujet de la qualitA© de l'audit en publiant des rapports d'inspection, et se propose d'instaurer des indicateurs de qualitA© de l'audit et de faire A©tat des rA©sultats de leur application. Pour jeter un A©clairage supplA©mentaire sur la qualitA© de l'audit, les auteurs recueillent auprA¨s d'auditeurs et d'investisseurs leurs opinions, leurs dA©finitions et leurs indicateurs en matiA¨re de qualitA© de l'audit. Ils constatent que les dA©finitions de la qualitA© de l'audit proposA©es par les investisseurs sont davantage centrA©es sur les intrants du processus d'audit que celles des auditeurs, et que les investisseurs considA¨rent le nombre des dA©ficiences relevA©es par le PCAOB comme un indicateur de la qualitA© globale du cabinet. Les auteurs notent l'existence d'un consensus quant au fait que les caractA©ristiques de l'auditeur seraient les dA©terminants les plus importants de la qualitA© de l'audit et que les retraitements seraient le signal le plus A©vident de la faible qualitA© de l'audit. Ils relient les rA©ponses des participants A un cadre de rA©fA©rence gA©nA©ral sur la qualitA© de l'audit, fournissent des arguments A l'appui des A©tudes d'archives en audit, et reconnaissent que les informations supplA©mentaires dont les participants suggA¨rent la publication pourraient signaler la qualitA© de l'audit. Dans l'ensemble, les auteurs prA©sentent des A©lA©ments probants en ce qui a trait A la notion de qualitA© de l'audit dans l'environnement postA©rieur A l'adoption de la SOX, A©valuent bon nombre des indicateurs de qualitA© de l'audit proposA©s par le PCAOB et suggA¨rent des pistes de recherche future.

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