The drivers of audit quality: views from Australian CFOs

The reputation of the audit profession has suffered somewhat over the past decade. Maintaining audit quality and restoring trust in the audit function after the global financial crisis and corporate collapses has thus become a priority, with regulators introducing reforms aimed at re-establishing confidence in the financial reporting system.

ACCA believes it is vital that we continue to explore the dynamic interaction between the audit process and its various stakeholders, and ways to enhance the value that audit brings to business and society. Practical, real-world research will enable regulatory changes to be more effective, by being evidence-based.
 
Research has shown that stakeholders’ perceptions of audit quality are critical to maintaining effective and efficient capital markets, and to building confidence and trust in financial reports, which in turn, is crucial for the economic success of both established and emerging firms. It is also important to audit firms to deliver high quality audit: it protects brand name and reputation, and relatedly, the ability to attract new clients and retain existing ones.
 
Chief financial officers’ (CFOs) perceptions of audit quality are particularly important as recent research suggests that management continues to be the ‘driving force behind auditor appointments and terminations’. This makes the views of key members of the management team (particularly CFOs) of what drives audit quality very important.
 
We hope that by presenting new findings on what drives the quality of audit through the eyes of finance leaders, we begin to better illuminate what is a complex relationship between regulation, audit quality and perception.
 
This report is highly relevant to audit professionals, business and finance leaders, and regulators alike.