Question 2 PPT

PRESENTED BY:
EXAMINING THE FACTORS THAT

IMPACT THE QUALITY OF AUDIT IN
FIRMS

Over the years there has been an increase in audits by the firms in order to provide
more transparency on their financial statements to their shareholders and stakeholders.
With the international and domestic cases of the continuous disclosures of the
financial statement scandals, the independent audit process and the results of the
quality issues and problems are also critical attention from all of the sectors to the
society. The quality of audit is critically important in order to ensure that the
information that has been presented to the users of the financial statements is true and
it has met the standards of the quality. Therefore, there are numerous factors that
affect the quality of audits to be the systematic analysis as well as actively explore the
effective methods in order to improve the quality of audit.
According to A Ghosh & D Moon (2005), the quality of audit
has been the soul of the audit profession and it resembles to
the important and critical interests of the public but at the
same time it is also related to the steady socio economic
development (Ghosh & Moon, 2005). The quality of audit
affects the effectiveness of the transparency of the firm and
it is growing issue for the investors of the company who
relies on the quality of the audit in order to understand the
performance of the company. The quality of audit also
affects the confidence of the public investors as well as the
capital market development maturity is also affected by the
quality of the audit.
According to the studies by Franzel & Jeanette
(2007), it shows that there are numerous
impacts of the audit quality and the following
are some of the impacts of the audit quality
factors;
INSTITUTIONAL FACTORS:
NON-COMPLIANCE FACTORS:
TECHNICAL FACTORS:

The study by Franzel & Jeanette (2007) reflects that the
institutional factors are among the top factors that affect the
quality of audit in firms and under institutional factors there are
some other aspects as well, such as;
According to Franzel (2007), the client integrity provides more
information on the financial statements of the credibility of the
relatively high, audit practice and it can be extremely effective in
order to reduce the audit risk towards the quality of audit. On the
other side, the devious customers, its annual statements there is
an error or fraud will be more likely to occur

Smith, Janice & Russell (1997), explained another institutional factor that impact the
quality of audit and it is governance structure and the internal control systems in an
organization. The international standards on auditing and concerns about the
management of legal frauds reflect the governance structure for the quality of the
audit. First the ownership and the excessive extent on the resolution mechanisms
controlling separation and its Focus on shareholders' equity, then there is collusion or
predatory interests of minority shareholders only risk, equity decentralized
management, then there is moral hazard.
Third, the system designed to prevent fraud. Impact of anti-fraud system of corporate
governance standards of financial reporting in two dimensions, so that the overall risk
in the company's system, including senior management, such as silver mansions,
Enron, important information in the wrong business systems to prevent high-risk
significant losses, such as Barings Bank, Singapore, China Aviation Oil, French bank
Societe General events
The first factor is the quality of the risk awareness auditors
is weak, such as in the last few years there has been
number of developments in the field of auditing and there
is also an increase in the audit practice by the firms. The
study by Bragg & Steven (2013), shows that due to less
personnel tasks some of the audit members in the firms and
some of the leading audit organizations the tasks for the
completion of audit are prominent and a weak awareness
for audit risk quality awareness is not very high and the
quality of the audit has been ignored as well as its
requirements.
Another factor that has been highlighted by CPA
is the professional care and professionalism
such as CPA defined professional care as the
process of the certified public accountants
which are in practice must be careful as its sole
purpose is that the economy from their clients
and customers the complicated business and the
other important matters that has been found in
different variety of clues which are found in the
trail of audit especially such customers that are
in the wrong place clues.
Kemshall, Hazel & Bernadette (2013) are also among those factors that impacts the
quality of audits in firms and the following information provides further analysis and
details into technical factors;
The audit quality of the personnel is not very high and it might does not meet the
work requirements and the knowledge of the auditor structure from the point of
view and the existing staff tends to understand the financial audit of the firm and its
ability for the comprehensive analysis for the talents and the response of the audit
staff is very poor and weak towards complex audit conditions and situations. This
affects the quality of audit in firms as the staff is not highly capable for performing
the audit on the firms.
F Dobre, D Vilsanoiu & E Turlea (2012) said that team
members in the audit team have the extensive practice
and experience in order to perform the audit and the
high experienced team will offer high quality audit.
The authors said that experience of the team members
is one of the key factors under technical factors that
affect the quality of audit in the firms. The accounting
firms finding it very difficult to safeguard their
legitimate interests and rights as well as to hire the
team members that are skilled and they can cope up
with the quality and standards of audits of their clients
This essay on examining the factors that affects the quality of audit in firms
provides information about the importance and the development of audit in the
recent years. This essay shows that there are three main factors that impacts upon
the quality of audit and these are institutional factors, non-compliance factors and
the technical factors. The quality of audit has been the growing and current issue
in the field of auditing as quality is highly concerned with the financial statements
is available for review to the users. The financial statements provide critical and
useful information to investors in order to make investment decisions. These
factors have clear impacts on the quality of audit and to improve the quality of
audit in firms these factors should be minimized or eliminated.

Question 2 PPT

Uploaded by

Copyright:

Available Formats

Question 2 PPT

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Question 2 PPT

Uploaded by

Copyright:

Available Formats

PRESENTED BY:

EXAMINING THE FACTORS THAT

You might also like