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    Audit quality: Insights from the academic literature
    research summary posted March 11, 2015 by Jennifer M Mueller-Phillips, tagged 11.0 Audit Quality and Quality Control, 11.08 Proxies for Audit Quality 
    Audit quality: Insights from the academic literature
    Practical Implications:

    This study provides a framework for synthesizing and understanding research related to audit quality by adopting a much broader perspective by including archival, behavioral, experimental, and survey method research, as well as including international research. This study should be useful to academic researchers, practitioners, regulators, investors, and others who are interested in understanding audit quality.

    For more information on this study, please contact Robert Knechel.


    Knechel, W. R., G. V. Krishnan, M. Pevzner, L. B. Shefchik, and U. K. Velury. 2013. Audit quality: Insights from the academic literature. Auditing: A Journal of Practice & Theory 32(sp1): 385-421.

    audit quality; audit quality indicators; auditor judgment; PCAOB synthesis
    Purpose of the Study:

    Despite more than two decades of research, audit quality is much debated but little understood. Different views suggest different metrics.  For example, audit quality can be absence of material misstatements from a user of financial report perspective, satisfactorily completing all tasks required by the firm’s audit methodology from an auditor’s perspective, one for which the work can be defended against challenge in an inspection or court of law from the audit firm perspective, in compliance with professional standards from a regulator perspective, or the avoidance of economic problems for a company or the market, from a society perspective.

    Therefore, this study intends to

    • Provide a review of existing definitions of audit quality and describe general frameworks for establishing audit quality.
    • Summarize research on indicators of audit quality such as inputs, process, and outcomes.
    • Discuss opportunities for future research
    Design/Method/ Approach:

    The authors use a ‘‘balanced scorecard’’ approach to understanding audit quality. They develop a framework for synthesizing and understanding research related to audit quality. The framework includes linkages across the primary attributes of the audit (incentives, uniqueness, process, uncertainty, and judgment) and among the different aspects of the audit—inputs, process, outcomes, and context.


    The synthesis study documents the following:

    • To consider what matters the most for improving audit quality, it is important to keep in mind all five attributes of the audit itself: incentives, uncertainty, uniqueness, process, and judgment.
    • It is important to bear in mind that audit quality is a perceived, rather than directly observed, and a ‘‘balanced scorecard’’ that captures the key attributes of auditing is a useful strategy to facilitate stakeholder perceptions about audit quality

    In summary, one might conclude that a ‘‘good’’ audit is one where there is execution of a well-designed audit process by properly motivated and trained auditors who understand the inherent uncertainty of the audit and appropriately adjust to the unique conditions of the client

    Audit Quality & Quality Control
    Proxies for Audit Quality