Developing a framework for audit quality management in audit firms

Abstract

Over the last few decades service quality has been investigated by many managers, researchers and scholars due to its influence on business success, measured with growing profitability, customer satisfaction, loyalty towards service provider, etc. (Cronin, Taylor, 1992; Chang, Chen, 1998; Silvestro, Cross, 2000; Zeithaml, Bitner, 2003, et al.). Quality is crucial in order to increase an organization’s comparative advantage, achieve long-term positive image and increase sales (Ruževicius, 2006). The stressed importance of service quality has triggered a plentiful amount of research revealing different approaches and new concepts (Finn, Lamb, 1991; Kettinger, Lee, 1995). The results of the research imply that an analysis of service quality should be conducted in each service provider’s organization, choosing an appropriate quality research approach and methodology (Edvardsson, 1996). General rules and concepts should be adapted to a particular service’s specifics in order to increase efficiency of service quality management (Suuroja, 2003). Emerging new theoretical models, such as internet banking (Broderick, Vachirapornpuk, 2002) and information technologies-based services (Zhu et al., 2002) evince the development of the service quality concept in various services. The financial audit service can be seen as an inseparable part of the controlling system in each country with a modern economy (Lakis et al., 1992; Lakis, 2007; Mackevicius, 2009). Historical circumstances imply that when an audit’s functions become weaker, not meeting markets’ expectations, it is common to doubt whether the audit system is working effectively, as well as whether particular audit companies are carrying out their work in a quality way. These thoughts are justified when breaches of auditors’ work have been detected. The quality of the financial audit service (further – audit quality) has already been researched for three decades, however, as the Financial Reporting Council of Great Britain (Financial Reporting..., 2006) states, there is no single definition of audit quality. This point of view can be explained by audit service complexity: due to triangular relationships between auditors,