This paper aims to investigate the relative importance of audit-team and audit-firm attributes in perceptions of audit quality by two groups of users of audit services: audit committee chairs/members (“insiders”) and financial analysts/fund managers (“outsiders”).
Using a survey questionnaire, data are gathered from 39 audit committee chairs/members and 42 financial analysts/fund managers and analysed using adaptive conjoint analysis.
The findings reveal that both groups perceive audit-team attributes as relatively more important than audit-firm attributes. This is consistent with expectations for “insiders”, but inconsistent with expectations for “outsiders”. Differences are also found in the internal ratings of some of the attributes, with “insiders” and “outsiders” placing different relative importance on some attributes.
The usual set of limitations that are present in a survey method also apply in this study, i.e. surveys rely on reports of behaviours rather than observations and are therefore susceptible to measurement error. A further limitation is that, in using adaptive conjoint analysis, the number of attributes that may be included in the survey is restricted and, consequently, the attributes selected may not be comprehensive or fully representative.
The study extends the scope of prior studies by examining the relative importance of audit-team and audit-firm attributes in perceptions of audit quality. In using conjoint analysis, the study makes a unique and innovative contribution by providing direct evidence on the relative importance of attributes in perceptions of audit quality for different users of audit services. The findings have implications for regulators and the accounting profession concerned with improving confidence in corporates and for audit firms in monitoring and promoting the quality of their audit services.
The authors are grateful to the anonymous reviewers for their helpful comments. They also appreciate the comments received from participants at the 2012 European Accounting Association Annual Congress, the Auditing Special Interest Group of the British Accounting and Finance Association Audit and Assurance Conference 2012 and the EIASM 4th Workshop on Audit Quality 2012 on earlier drafts of this manuscript.
Kilgore, A., Harrison, G. and Radich, R. (2014), "Audit quality: what’s important to users of audit services", Managerial Auditing Journal, Vol. 29 No. 9, pp. 776-799. https://doi.org/10.1108/MAJ-08-2014-1062Download as .RIS
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