Naslov
A Report on the Insights on Audit Quality Topic

Autori
Aljinović Barać, Željana ; Šodan, Slavko ; Vuko, Tina

Vrsta, podvrsta i kategorija rada
Radovi u zbornicima skupova, cjeloviti rad (in extenso), znanstveni

Izvornik
88th International Scientific Conference on Economic and Social Development - "Roadmap to NetZero Economies and Businesses" Conference Proceedings / Janjusevic, Jelena ; Hopkinson, Paul ; Pandza Bajs, Irena - Dubai : Varazdin Development and Enterprenurship Agency and Herriot - Watt University, 2022, 339-345

Skup
88th International Scientific Conference on Economic and Social Development - "Roadmap to NetZero Economies and Businesses"

Mjesto i datum
Dubai, Ujedinjeni Arapski Emirati, 19.10.2022. - 20.10.2022

Vrsta sudjelovanja
Predavanje

Vrsta recenzije
Međunarodna recenzija

Ključne riječi
audit quality, Big N Auditor, financial reporting quality

Sažetak
This paper provides theoretical background and literature review on the audit quality (AQ), dealing with the questions of AQ definition and measurement, and whether Big 4 auditors provide higher AQ than non-Big 4 auditors. Accounting standards require a high-quality financial reporting system to provide decision-useful information that is relevant, and faithfully represents underlying economic reality of the firm's activities and its financial condition. Both academics and practitioners agree that an essential feature of the financial reporting process is financial reporting quality (FRQ), but still there is no consensus on its definition and meaning. FRQ is commonly described as a function of AQ, the quality of the firm's financial reporting system which maps its underlying economics into financial reports, and its innate characteristics which determine its underlying economics. However, there is also no consensus on definition and measurement of AQ because the amount of assurance provided by auditors is unobservable. The contribution of this paper is the review of the most relevant AQ measures and discussion on their advantages and disadvantages. Although most of the previous research deals with the output-based proxies on the auditor supply side, recently, the focus has turned to input-based proxies on the client demand side, such as audit fees and auditor size. Thus, this paper additionally deals with homogeneity of audit quality across audit firms, i.e., reconsidering whether large audit firms deliver higher audit quality, as signalled by their reputation and by the "deep-pockets" hypothesis. However, the arguments why smaller audit firms could provide comparable audit quality will be debated, and strengths and weaknesses when engaging Big N or non-big N auditors will be listed.

Izvorni jezik
Engleski

Znanstvena područja
Ekonomija

POVEZANOST RADA