Audit service quality in compulsory audit tendering

Kym Boon (Department of Accounting and Finance, Macquarie University, Sydney, Australia)
Jill McKinnon (Department of Accounting and Finance, Macquarie University, Sydney, Australia)
Philip Ross (School of Accounting, University of Western Sydney, Sydney, Australia)

Accounting Research Journal

ISSN: 1030-9616

Publication date: 30 September 2008

Abstract

Purpose

The paper aims to analyse audit service quality attributes that were perceived to be important in compulsory audit tendering (CAT) in local councils in New South Wales (NSW). It focuses principally on whether CAT leads to an impairment of auditor independence and audit quality.

Design/methodology/approach

A questionnaire survey was conducted of 235 NSW local council finance professionals and 35 local council internal auditors in May 2006.

Findings

The most important attributes in evaluating audit service quality were industry expertise, audit firm experience with a council, technical competence, independence, ethical standards and due care. The least important attributes were scepticism, freshness of perspective, audit firm size, and non‐audit services. There is considerable consistency in the findings with those in non‐CAT contexts.

Research limitations/implications

The paper is subject to the general limitations of the survey questionnaire method. A further limitation is that audit quality was assessed using perceptions of audit service quality by preparers of local council financial statements, rather than by users of those statements.

Practical implications

Audit firms will be better able to understand the audit service quality attributes valued by local council clients, to differentiate their promotional and service‐provision strategies, improve their audit quality, and better satisfy local council clients. Concerns that CAT may impair audit independence and audit quality do not appear to be founded.

Originality/value

Because the results are generally consistent with findings in non‐CAT contexts, there can be more confidence in CAT as a regulatory form of audit procurement.

Keywords

Citation

Boon, K., McKinnon, J. and Ross, P. (2008), "Audit service quality in compulsory audit tendering", Accounting Research Journal, Vol. 21 No. 2, pp. 93-122. https://doi.org/10.1108/10309610810905917

Download as .RIS

Publisher

:

Emerald Group Publishing Limited

Copyright © 2008, Emerald Group Publishing Limited

Please note you might not have access to this content

You may be able to access this content by login via Shibboleth, Open Athens or with your Emerald account.
If you would like to contact us about accessing this content, click the button and fill out the form.
To rent this content from Deepdyve, please click the button.