Directors’, CFOs’ and auditors’ perceptions of audit quality

This report compares the perceptions of auditors, CFOs and directors on the relative importance of 10 key audit quality attributes identified by prior research. The literature review is supplemented by survey results and focus group sessions conducted with representative members of the three stakeholder groups.

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ACCA and the International Governance and Performance (IGAP) Research Centre, based in Macquarie University, Sydney, compared the perceptions of audit quality from three key stakeholder groups - auditors, CFOs and non-executive directors. The resulting report draws together and compares the results of three earlier survey studies, each of which investigated the relative importance that a particular stakeholder group attaches to a range of 10 attributes commonly associated in the scholarly literature with Audit Quality (AQ). This desk research was further supplemented by fresh survey and focus group discussions.

The key findings of the report include:

  • Audit firm size’ is seen as the most important AQ attribute by all the stakeholder groups, supporting earlier findings that large firms deliver a better-quality audit service. However, unsurprisingly, auditors from mid-tier firms argued that their firms were equally capable of delivering audit quality. 
  • The second highest ranking was ‘Partner/manager attention to audit’. In the focus sessions it emerged that directors are particularly concerned that they have the utmost confidence in the senior members of the audit team conducting their audits. This is to help directors be confident they are meeting their legal responsibilities.
  • All three stakeholder groups gave relatively low rankings to ‘Audit partner tenure’ and ‘Audit quality assurance reviews’, the former receiving the second-lowest overall ranking across all attributes and the latter receiving the lowest. This suggests that the high level of importance commonly attached to these two attributes by regulators and standard setters is not shared by auditors, CFOs and directors.

The report contributes to public understanding of audit quality and should be of value to preparers, regulators, audit committee members, investors and auditors in ongoing audit debates.

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