1
Audit Quality
The 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 QUALITY
Audit 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 dilemmas
Extent of judgment that is required when auditing
certain balances and transactions
.
audit firm size
Others…refer article ACCA
2
Audit Quality
Four categories of
audit
deficiencies
:
tendency to accept management’s
representations without adequate
verifications
inadequate documentation of audit
work
failure to report any departures from
accounting standards
uncritical acceptance of
questionable accounting practices
3
AUDIT QUALITY
The 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
Engagements
applies to all firms of professional
accountants in respect of audits and reviews of
financial statements, and other assurance and
related services engagements
2. ISA 220,
Quality Control for an Audit of Financial
Statements
is specific to audit engagements and
contains specific requirements that should be
adhered to in the performance of any audit.
