Publication Details
Abstract
Purpose — This study seeks to determine the extent to which audit firms are implementing quality control in the professional environment and examine the effect quality control has on audit firms' performance level. This research is motivated by the increasing role of audit service quality in improving trustworthiness of financial information and increasing user confidence of financial statements. A general model was utilized, examining the theoretical aspects of quality control, its purpose, and its components as stated in international standards (ISQC 1, ISQM 1), and checking the tasks performed by audit firms and indicators used to measure their effectiveness. Despite being built on the foundation of renown theoretical models such as the Audit Quality Model, the Agency Model and the Professional Trust Model, the role of the independent variable (quality control) and the dependent variable (audit firm performance) was only established through the lens of relationships .
In order to enhance the practical aspect, this study used descriptive and analytical methods in which a questionnaire, built according to standard dimensions, was used to probe the extent to which initiatives and traditional control are practiced in audit firms and their impact on performance. A purposive sampling of employees of audit firms which have received its operating permits was secured. A number of statistical methods implemented through SPSS program were performed to analyze the data (i.e., reliability test (Cronbach’s Alpha), Descriptive statistics, multiple linear regression, Pearson correlation and variance analysis) in order to test the research hypotheses and to measure the strength and direction of relationship between the two variables.
The results showed that quality control is even at medium to high level in most of the audit firms; but, compliance level was fluctuated according the size of the firm and quantity of human and organizational resources. Regarding the overall score of the control factors, the results also showed that there is a statistical significant positive relationship between the extent of implementation of quality control and enhancement of audit firm performance, especially with regard to the quality of report, compliance with standards, and speed and decrease of professional errors. The analysis established that quality control factors regarding independence of the firm, competence of personnel, and internal review are the most important for performance.
In conclusion, the study found several important insights, but most importantly that no room for quality control is an option for any given professional firm, it is a form of necessity that is a prerequisite for sustainability as well as trust enhancement. The principal challenges obstructing functional quality control, include weak training, ineffective tracking and lack of resources. It had also made practical suggestions, such as the need for professional trainings, to implement periodic monitoring procedures and to modernize the legal framework of audit firms to meet the newest global standards.
This study adds to the knowledge by linking the theoretical lens and actual statistical evidence, it helps to clarify the way quality control systems affect the performance of audit firms and provide a sound scientific base for future research.