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Audit quality indicators: Perspectives from Non-Big Four audit firms and small company audit committees

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  • Harris, M. Kathleen
  • Williams, L. Tyler

Abstract

Through a combined study, we explore the professional perspectives of two distinct PCAOB constituent groups related to the PCAOB's proposed regulatory approach for audit quality indicators. First, we examine the comment letters of Non-Big Four audit firms and find that this specific constituent group views most of the PCAOB's proposed audit quality indicators as infeasible and redundant. Further, Non-Big Four audit firms contend that the indicators require greater clarification from the regulator as well as substantial accompanying qualitative context to avoid misinterpretation that may lead to unintended consequences. Second, we survey a collection of audit committee members from small, publicly-traded companies regarding the current evaluation and perceived effectiveness of eleven specific PCAOB audit quality indicators, each of which is well-established in the extant audit quality literature. We find indicators related to auditor personnel with specialized skill and knowledge, experience of audit personnel, and the timely reporting of internal control issues are perceived to possess the highest level of effectiveness in the evaluation of audit quality.

Suggested Citation

  • Harris, M. Kathleen & Williams, L. Tyler, 2020. "Audit quality indicators: Perspectives from Non-Big Four audit firms and small company audit committees," Advances in accounting, Elsevier, vol. 50(C).
    • Handle: RePEc:eee:advacc:v:50:y:2020:i:c:s0882611020300559
    DOI: 10.1016/j.adiac.2020.100485
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    Cited by:

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    2. Luis Porcuna-Enguix & Elisabeth Bustos-Contell & José Serrano-Madrid & Gregorio Labatut-Serer, 2021. "Constructing the Audit Risk Assessment by the Audit Team Leader When Planning: Using Fuzzy Theory," Mathematics, MDPI, vol. 9(23), pages 1-22, November.
    3. Khowanas Saeed Qader & Kemal Cek, 2023. "Analysis of the Impact of External Auditors’ Autonomy on Financial Accounting Information Quality Case Study Commercial Banks in Northern Iraq," Sustainability, MDPI, vol. 15(12), pages 1-21, June.

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