Great Expectations?: The Dubious Financial Legacy of Quality Audits

This study aims to examine and provide empirical evidence of the effect of client company size on audit quality as well as the effect of audit quality on litigation and company value of both audit quality-detecting misstatement and audit quality-reporting misstatement and analyzing based on auditor-auditee factors in the perspective of regulation theory and signal theory. This type of research is quantitative-causality conducted by survey method. The population in this study is an accountant who works as an external auditor who is in Indonesia with a sample of accountants who work as an external auditor at the KAP located in the Jakarta area. The number of samples used as much as 168 respondents. Withdrawal technique/sampling is done by purposive sampling based on certain considerations (judgment sampling). The type of data used is primary data and data collection techniques using questionnaires (questionnaires) that researchers directly to the respondent or sent via the post office. The scale used is the interval scale by providing 6 choices of answers. Furthermore, to test the hypothesis in this study used path analysis. The results showed that: 1) The size of the client company had a significant positive effect on the audit quality-detecting misstatement but had no significant effect on the audit quality-reporting misstatement; 2) Audit quality-detecting misstatement and quality audit-reporting misstatement have a significant negative effect on litigation; 3) Audit quality-detecting misstatement and audit quality- reporting misstatement have a significant positive effect on company value. The results of this study also shows that not only auditor factors that affect audit quality but auditee factors also affect to audit quality.

Background. Good audit quality reflects the level of confidence that the financial statements are free from material misstatement, whether caused by errors or fraud. When audit quality is low, for example, because auditors are not independent, tenure is too long without rotation, or the audit fee is too high, creating a conflict of interest, the risk of not detecting fraud increases. Aim. This study aims to reveal the strategic role of the audit committee in improving audit quality through analysing the relationship between fees, tenure, and auditor rotation on audit quality. With a quantitative approach and the aid of AMOS software, as well as Path Analysis techniques, this study aims to empirically map the structural relationship between these variables within the framework of governance and resource dependence. Methods. In conducting this research, the authors chose a research place in manufacturing companies listed on the Indonesia Stock Exchange for the period 2018-2021. In terms of type, this research uses a quantitative approach. Data in the form of numbers is collected through access to the Indonesia Stock Exchange website. This research uses descriptive and verification methods. The analysis technique employed is path analysis, utilizing AMOS (Analysis of Moment Structures) software. Result. Based on the results of model testing, it is found that only audit fees affect the audit committee. The absence of an effect of audit fees on audit quality in companies can be attributed to the level of professionalism of public accounting firms, which continue to maintain optimal audit quality, regardless of the amount of fees received. In contrast, the tenure and auditor rotation variables in this study did not show a significant effect on the audit committee, which indicates that these two variables may not yet be the main factors considered by the audit committee in their supervisory practices, or that their effects are more indirect and take longer to be observed. Conclusion. Based on the test results obtained, it is found that: (1) Only audit fees affect the audit committee, (2) Based on the regression test results, it is found that FA has a significant adverse effect on KOM_AUDIT with an estimate value of -0.090, standard error of 0.019, critical ratio of -4.729, and significance level of p < 0.001. This indicates that an increase in FA will lead to a decrease in the Audit Committee (3) In general, these findings confirm that in this model, the FA factor has an essential role in influencing the Audit Committee. At the same time, other aspects have not shown a significant relationship. This result implies that efforts to increase or change FA need more attention to improve or maintain audit quality. (4) In this study, it was found that audit fees affect the audit committee but have no effect on the audit quality of manufacturing companies. This result aligns with the principle of Resource Dependence Theory, where companies, through audit committees, seek to manage their relationships with external auditors as audit service providers to secure a crucial resource: quality audit services. Implementation. With the increasing complexity and risk of financial fraud, the results of this study are expected to make theoretical and practical contributions in encouraging the improvement of audit quality, strengthening audit committees, and developing more accountable corporate governance policies.

Research aims: This research is based on the phenomenon that occurred related to the existence of several limitations faced by the Supreme Audit Agency of the Republic of Indonesia in carrying out audits of financial statements in public sector entities. This condition risks affecting audit quality, resulting in the emergence of information gaps between BPK RI, the public and related stakeholders. The purpose of this study was to examine and analyze whether the effect of each independent variable (X1, X2 and X3), including electronic audit (e-audit), audit judgment and the detection of corruption affecting audit quality as the dependent variable (Y ).
 Design/Methodology/Approach: The research method used is a quantitative method. This study examines the effect of e-audit, audit judgment and corruption detection on audit quality. This study uses primary and secondary data with a research instrument in the form of a questionnaire. The object of this study is the IB Auditorate as a work unit equivalent to echelon II under the Main Auditorate of State Finance I at the Head Office of the Supreme Audit Agency of the Republic of Indonesia. The number of respondents in this study were 40 auditors/examiners in the IB Auditorate. The type of analysis in this study was statistical descriptive analysis. The statistical analysis tools used are the SPSS and Eviews applications.
 Research findings: The results of the empirical study revealed that each of the independent variables (X1, X2, and X3), including e-audit, audit judgment and detection of corruption, had a positive and significant effect on audit quality as the dependent variable (Y).
 Theoretical contribution/Originality: Future research is needed to develop with other indicators besides the quality of electronic audit (e-audit), audit judgement, corruption detection and audit quality.

The purpose of the research: This study aims to investigate the effect of joint audit on audit quality through the experience of the external auditor whether local or international. Data and materials and methodology: This study uses a random sample of 43 Yemeni legal auditors in Yemeni audit offices and firms. The questionnaire was used as a tool for data collection, and the data were analyzed using regression and path analysis using SPSS software. Results: The results show that joint audit has a positive and significant effect on the local external auditor’s experience, but not on the international external auditor’s experience. The results also show that the external auditor’s experience has a positive and significant effect on audit quality, but joint audit does not have a direct significant effect on audit quality. However, joint audit has an indirect significant effect on audit quality through the local external auditor’s experience, but not through the international external auditor’s experience. Main findings: The results of this study indicate that joint audit contributes to raising the level of quality and professionalism in audit reports and helps to develop the external auditors’ experience and improve their performance in report preparation. These results are consistent with some of the theories and previous studies that confirmed the role of joint audit in enhancing audit quality and external auditors’ experience. Kaywords: joint audit, international experience of external auditor, local experience of external auditor, audit quality.

In recent years, there has been increasing interest and demand for the application of good corporate governance mechanisms and compliance programs as a means of reducing corruption in institutional companies. Since corporate corruption is widespread in all societies, both developed and developing, and since corruption has a serious impact on economic, sustainable, and social development, there has been widespread agreement that the application of good corporate governance mechanisms and compliance programs are effective tools that can reduce the serious consequences of corruption in large companies. Therefore, this study aimed to study the impact of the application of different corporate governance mechanisms and compliance programs on reducing corporate corruption. The study also included the advantages and disadvantages of each corporate governance mechanism according to the latest findings of experimental studies. The study also assessed the extent to which Egyptian companies comply with the Egyptian legislation and laws issued for corporate governance, and identified the best mechanisms that can be applied in Egyptian companies to govern those companies and implement compliance programs, and the impact of the application of good governance in reducing Egyptian corporate corruption, increasing employee and customer satisfaction, and reducing the depletion of company resources. In addition, the study addressed the main challenges facing Egyptian companies in implementing good corporate governance and compliance. The results of the study indicated that corporate governance mechanisms proposed by most international agencies and organizations concerned with combating corruption have an effective impact in reducing corruption in companies. However, to achieve the desired results from each good corporate governance mechanism, recent experimental studies have proposed some requirements or precautions that companies or governments can commit to to maximize the benefits of these mechanisms. On the other hand, the results of the study showed that Egyptian companies, both in the private and public sectors, have taken serious steps in implementing good corporate governance and implementing compliance programs. However, companies do not fully comply with the instructions of good corporate governance, and there are still some shortcomings in the implementation of good corporate governance and compliance programs. These shortcomings are due to several different reasons, which are mainly related to the non-mandatory nature of corporate governance in Egypt, in addition to the lack of sufficient incentives for companies to implement the proposed programs. Keywords: Governance mechanisms – compliance programs – corruption

Purpose This study aims to provide a conceptual model based on future research methods on the impact of blockchain on audit outputs, to examine the effect of blockchain on audit outputs (audit quality and audit expectation gap) and, finally, to analyze the dimensions and identify components of each aspect of the effectiveness of blockchain technology in the audit profession. Design/methodology/approach This research evaluates and systematically analyzes the results using a qualitative approach and future research tools, particularly the Structural Equation Modeling method. In this research, the opinions of 20 experts regarding the dimensions of blockchain, which have affected the expectation gap and audit quality, have been queried. Findings The findings of this study articulate that blockchain impacts two critical dimensions of audit outputs, including audit quality and expectation gap. Based on the research results, it has been determined that blockchain has a positive and significant effect on audit quality. Conversely, it negatively and significantly impacts the audit expectation gap. This means that using blockchain in Iran’s audit system can lead to an increase in audit quality and a reduction in audit expectation gaps. Originality/value As research has yet to be done so far to provide a model regarding the impact of blockchain on audit outputs in Iran, this study can be considered one of the first in this regard. Also, while presenting conceptual models of the impact of blockchain on audit outputs, this research shows the various issues of the gap between expectations and blockchain, which has not been entirely evident in Iran, then, based on them, analyzes the impact of blockchain. This study deals with audit outputs (audit quality and audit expectation gap).

Effective communication is essential for maintaining audit quality and providing assurance over financial information. This study investigates auditors' communication channel preferences and their impact on audit quality in the context of digitalization and changing communication norms. The research aims to address two primary questions: the communication channels auditors prefer and use for audit-client communication, and how the choice of communication channels influences audit quality. The audit quality is measured through audit effort and auditor performance using a descriptive and quantitative research design. The preferred and actual communication channels are categorized as traditional (face-to-face) and technology-mediated (e-mail, instant messaging, phone calls). The findings reveal that while auditors prefer in-person meetings and texting platforms, they mostly use technology-mediated communication during audits, possibly due to factors like the COVID-19 pandemic. The study contributes to a deeper understanding of auditors' communication choices and their impacts on audit quality. It suggests that the complex relationship between communication channels and audit quality needs further exploration, potentially through larger sample sizes and mixed-method approaches. The insights gained from this research can benefit audit practitioners, regulators, and educators in enhancing audit communication practices and quality.

This study aims to analyze the effect of audit committee activities on audit quality, analyze the effect of audit committee independence on audit quality, analyze the effect of audit committee competence on audit quality, and analyzethe effect of female audit committees on audit quality. The number of samples in this study was 12 companies for 6 years, namely 2018 to 2023, so that the total number of observations was 72 samples. The data analysis technique used multiple regression. The results of the analysis show that audit committee activities have a positive and significant effect on audit quality. This indicates that a more active audit committee supervises the audit process and ensures that auditors carry out their duties independently and objectively encourages auditors to carry out audits more carefully and produce quality audits. Audit committee independence has no effect on audit quality. This shows that audit committee independence cannot affect the quality of audits producedby external audits. Supervision related to audit results carried out by an independent audit committee if not balanced with competence and experience related to the related field to supervise external audit performance to produce quality audit reports. Audit committee competence has no effect on audit quality. This shows that audit committee competence cannot affect the quality of audits from external auditors. Auditors in carrying out their audits must remain in accordance with procedures and must improvetheir audit quality so that the audited financial statements can reflect the true value. The existence of a female audit committee does not affect audit quality. This shows that the presence of women in the audit committee does not affect the audit quality of external auditors. External auditors in carrying out the audit process are not influenced by the gender of the audit committee in carrying out the supervisory function and the audit results made by the external auditor.

The study aimed to identify the relationship between time budget pressure and the quality of external auditing in the Jordanian environment through the mediating role of professional skepticism. The moderating role of external auditors' professional commitment in this relationship was tested. The study population consisted of certified Jordanian accountants. 234 questionnaires were distributed to the respondents. The study indicated that certified Jordanian accountants are subject to a high level of pressure, in addition to having a high level of audit quality and professional skepticism, and they are professionally committed. The results of the analysis also indicated that high professional skepticism affects the quality of the external audit and that there is an impact of time budget pressure on the quality of the audit, as the pressure of deadlines for preparing audit reports reduces the level of professional skepticism practiced by external auditors in Jordan. The results also indicated that auditors' professional commitment moderates the relationship between time budget pressure, the level of professional skepticism, and audit quality. Interestingly, there is no moderating role for professional commitment in the relationship between professional skepticism and the quality of external auditing in Jordan. This study emphasizes the need for auditors to maintain professional skepticism when exposed to pressures, including time budget pressure, in order to produce high-quality audit reports.

This study assessed the audit quality of financial and compliance audits conducted by state auditors in the Commission on Audit (COA) Regional Office No. 01, focusing on the corporate government sector in Region I, Philippines. Utilizing a descriptive-correlational research design and survey data from 40 state auditors and 120 auditees across various government-owned and controlled corporations, the study examined perceptions of key audit quality determinants and associated challenges. Data were analyzed using weighted mean and Pearson r. Findings showed that both auditors and auditees rated the influence of five audit quality determinants as high to very high. “Independence and Objectivity” consistently received the highest ratings, while “Adherence to Public Sector Auditing Standards” received the lowest, although still within high category. Challenges were significantly associated with lower financial audit quality but had no significant effect on compliance audit quality. The study concludes that COA Regional Office No. 01 maintains high audit quality, particularly in compliance audits, underscoring the importance of technical competence and adherence to standards. However, resource, time constraints and threats to independence and objectivity hinder audit thoroughness, especially in financial audits, which are more sensitive to these challenges than compliance audits. Recommendations include targeted auditor training, enhanced resource allocation, stronger methodological oversight, expanded IT support, and improved auditee engagement. Future research should consider broader COA sectors and explore perception gaps between auditors and auditees.

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The study reviews committees and their role in improving the external audit quality through examining a case study of Sudanese banks. The study problem can be formulated from the following questions: Is there a relation between the independence of the audit committees and the quality of the external audit process? The impact of the expertise and knowledge of the members of the review committees in improving the quality of the external audit the importance of scientific research in bridging the gap in the studies that dealt with the audit committees and linking them to the quality of external audit stems from the importance of the study of the vital role played by the review committees in strengthening the quality of external audit. The study's objective is to know the role of the review committees in improving the quality of the external audit and clarify the theoretical framework of the review committees. To achieve the study's objectives, the following hypotheses were formulated: There is a statistically significant relationship between the independence of the review committees and the improvement of the quality of the external audit. There is a statistically significant relationship between the experience and knowledge of the members of the review committees and the improvement of the quality of the external audit and external audit quality. The study adopted the descriptive analytical method using the statistical package for social sciences (SPSS). The study of the selection of members of the Audit Committee by the shareholders and with the participation of the Board of Directors leads to the improvement of the quality of the external audit, the selection of members of the Committee from non-executive members leading to the improvement of the quality of external audit. The study concluded with some recommendations. It recommended that the Audit Committee be increased in the bank in additional training sessions to improve the quality of the external audit. Specific conditions must be specified to penalize the Audit Committee in the event of persistent participation in financial and administrative corruption affecting the quality of the external audit.

This study seeks to add to understanding of the concept and attributes of audit quality from the perspective of those responsible for delivery audit services, the auditors, as a key constituent group in the auditing system. The study surveyed two groups of external auditors (group 1- audit partners and managerial level and, group 2 - senior auditors and junior auditors), as a basis to compare their perceptions on important of auditors and audit process attributes in achieving audit quality in practice. The study was conducted in the form of a survey, with data being gathered via questionnaire. Returned surveys from external auditors yielded a 37% response rate. Overall, top 5 highest rated attributes of audit quality reported to be most important in determining audit quality are: compliance with the International Standard Quality Control (ISCQ) 1, obtaining credible and sufficient audit evidence, technical expertise of audit team, audit work meeting the audit firms’ quality standards, and competency of the audit team. Further analysis shows that the two groups of respondents have differential views on attributes of audit quality in practice. Group 1 perceived attributes of audit quality are related to auditor’s assessment of risk and internal quality review procedures within the audit firm. In comparison, group 2 perceived auditors’ competency and compliance with relevant standards as indicators of audit quality. This study suggests differences in underlying view about attributes audit quality in practice by the two groups of auditors. Public accounting firms might be interested to understand such underlying differences so that efforts in improving audit quality in practice would be focusing on the key attributes that perceived to be important on delivery high-quality audit services. This study is significant by extending the literature on audit quality and also provides useful input to public accounting firms in improving audit quality in practice.

Auditor perceptions of time budget pressure and work stress have been widely discussed as factors contributing to declining audit quality. This study aims to examine the impact of time budget pressure on the decline in audit quality, with work stress as a mediating variable. This research employed a quantitative approach using a survey questionnaire distributed to auditors working at public accounting firms. Central Java, Indonesia. A total of 62 valid responses were analyzed. Convenience sampling was applied, and data were analyzed using the partial least squares (PLS) method. The results of the study indicate that time budget pressure and work stress both have a positive and significant effect on audit quality decline. Furthermore, work stress is proven to mediate the relationship between time budget pressure and audit quality decline. These findings imply that the pressure to complete audits does not directly decrease audit quality; rather, such pressure increases auditor stress, which subsequently leads to a decline in audit quality. Therefore, work stress acts as a bridge linking time budget pressure to reduced audit quality. This study contributes to the behavioral accounting literature by emphasizing the mediating role of work stress in understanding how time constraints influence audit quality and by providing insights for promoting sustainable audit practices.

Purpose — This research aims to investigate the factors that affect audit quality, including the board of directors’ characteristics and performance, the audit committee's responsibilities, internal audit factors and performance, and the quality of the external audit. Design/methodology/approach—This study expanded on previous research that has used different proxies to measure audit quality. It employed a questionnaire to measure audit quality and internal governance mechanisms by adopting some practical indicators from previous literature that could reflect and affect audit quality. Findings — According to the regression results, it has been found that there is a strong positive relationship, which is statistically significant, between the work performance of internal auditors and the audit quality (β =0.280, p=.000); the strongest relationship was between audit quality and work performance, and it contributes to the model, and this is consistent with prior studies. Further, the board of directors’ responsibilities has been determined to have a significant impact on audit quality where the coefficient of determination is .085 at a significant level. Practical implications — Due to prevalent corporate scandals and audit failures worldwide in recent years, there has been a renewed interest in the relationship between Internal Corporate Governance Mechanisms (ICGM) and External Audit Quality (EAQ). Audit quality and corporate governance mechanisms are significant aspects of today’s business practices. Hence, these issues have evoked interest and received the attention of regulators, researchers, and practitioners. They have become the centre of the argument due to their role in boosting investors’ confidence and improving the reliability of financial reports. Originality/value—The current study contributed to the auditing and corporate governance literature. It expanded on previous research that used different proxies to measure audit quality and factors influencing audit quality. Keywords — Pancasila, accounting education, accountant, financial fraud Paper type — Research Paper