Monitoring audit quality and firm resources of audit firm practices in Malaysia: the implementation of ISQC 1

Abstract

Audit quality is the core of business strategy and key driver of success for audit firms. With the adoption of International Standard Quality Control (ISQC 1), the Malaysian Institute of Accountant (MIA) is enforcing quality control for all audit firms in Malaysia. Semi-structured interviews were conducted for four discussion groups comprised of audit seniors, managers and partners of Big 4 and non-Big 4 audit firms. This research paper reports an exploratory study on the implementation and acceptance of ISQC 1. Results indicate that small audit firms in Malaysia are prepared with the implementation of ISQC 1. However, acceptances vary between the Big 4 and non-Big 4 audit firms. Results also indicate that working experience of the auditors, professional qualifications; education background and on-the-job trainings, and job performance appraisals, do have an effect on audit quality. Hence, the audit firm resources such as human resource characteristics are important in ensuring quality audit work.