1Audit QualityThe issue of audit quality has always been a key consideration for auditors. Performing a high quality audit means that 1. audit risk is reduced and 2. the audit firm is less likely to issue an inappropriate audit opinion. However, periodic reviews by regulatory authorities on the work performed by audit firms often conclude that audits performed are not always of high quality, despite this being in the best interest of the audit firm.These also attracted substantial criticisms towards the competence and independence of auditor. Due to that, International Federation of Accountants (IFAC) has commissioned various project to restore the credibility in accounting profession. One of the product is ISA 220- Quality Control for Audit Work and ISQC 1
AUDIT QUALITYAudit firms are faced with great pressures which may lead to them compromising audit quality. Among the factors that affect audit quality include;Issues relating to competence (auditors’ capacities in auditing the client (De angelo, 1981), independence of the auditor over the client (De angelo 1981).Pressures can be in the form of tight deadlines Restrictions on audit fees, Ethical dilemmasExtent of judgment that is required when auditing certain balances and transactions.audit firm sizeOthers…refer article ACCA2
Audit QualityFour categories of audit deficiencies:tendency to accept management’s representations without adequate verificationsinadequate documentation of audit workfailure to report any departures from accounting standardsuncritical acceptance of questionable accounting practices3
AUDIT QUALITYThe International Auditing and Assurance Standards Board (IAASB) has issued two documents relating to quality control. 1. ISQC 1,Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagementsapplies to all firms of professional accountants in respect of audits and reviews of financial statements, and other assurance and related services engagements2. ISA 220,Quality Control for an Audit of Financial Statementsis specific to audit engagements and contains specific requirements that should be adhered to in the performance of any audit.