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8/12/2019 question2ppt

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PRESENTED BY:


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EXAMINING THE FACTORS THAT

IMPACT THE QUALITY OF AUDIT INRMS


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According to A Ghosh & D Moon (2005), the quality of audit

has been the soul of the audit profession and it resembles to

the important and critical interests of the public but at the

same time it is also related to the steady socio economic

development (Ghosh & Moon, 2005). The quality of audit

affects the effectiveness of the transparency of the firm and

it is growing issue for the investors of the company whorelies on the quality of the audit in order to understand the

performance of the company. The quality of audit also

affects the confidence of the public investors as well as the

capital market development maturity is also affected by the

quality of the audit.


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According to the studies by Franzel & Jeanette(2007), it shows that there are numerousimpacts of the audit quality and the followingare some of the impacts of the audit quality

factors;

INSTITUTIONAL FACTORS: NON COMPLIANCE FACTORS: TECHNICAL FACTORS:


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The study by Franzel & Jeanette (2007) reflects that the

institutional factors are among the top factors that affect thequality of audit in firms and under institutional factors there are

some other aspects as well, such as;

According to Franzel (2007), the client integrity provides more

information on the financial statements of the credibility of the

relatively high, audit practice and it can be extremely effective in

order to reduce the audit risk towards the quality of audit. On the

other side, the devious customers, its annual statements there is

an error or fraud will be more likely to occur


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Smith, Janice & Russell (1997), explained another institutional factor that impact the

quality of audit and it is governance structure and the internal control systems in an

organization. The international standards on auditing and concerns about the

management of legal frauds reflect the governance structure for the quality of the

audit. First the ownership and the excessive extent on the resolution mechanisms

controlling separation and its Focus on shareholders' equity, then there is collusion or

predatory interests of minority shareholders only risk, equity decentralized

management, then there is moral hazard.

Third, the system designed to prevent fraud. Impact of anti-fraud system of corporate

governance standards of financial reporting in two dimensions, so that the overall risk

in the company's system, including senior management, such as silver mansions,

Enron, important information in the wrong business systems to prevent high-risk

significant losses, such as Barings Bank, Singapore, China Aviation Oil, French bank

Societe General events


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The first factor is the quality of the risk awareness auditors

is weak, such as in the last few years there has beennumber of developments in the field of auditing and there

is also an increase in the audit practice by the firms. The

study by Bragg & Steven (2013), shows that due to less

personnel tasks some of the audit members in the firms andsome of the leading audit organizations the tasks for the

completion of audit are prominent and a weak awareness

for audit risk quality awareness is not very high and the

quality of the audit has been ignored as well as its

requirements.


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Another factor that has been highlighted by CPA

is the professional care and professionalism

such as CPA defined professional care as theprocess of the certified public accountants

which are in practice must be careful as its sole

purpose is that the economy from their clientsand customers the complicated business and the

other important matters that has been found in

different variety of clues which are found in the

trail of audit especially such customers that are

in the wrong place clues.


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Kemshall, Hazel & Bernadette (2013) are also among those factors that impacts the

quality of audits in firms and the following information provides further analysis and

details into technical factors;

The audit quality of the personnel is not very high and it might does not meet the

work requirements and the knowledge of the auditor structure from the point of

view and the existing staff tends to understand the financial audit of the firm and itsability for the comprehensive analysis for the talents and the response of the audit

staff is very poor and weak towards complex audit conditions and situations. This

affects the quality of audit in firms as the staff is not highly capable for performing

the audit on the firms.


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F Dobre, D Vilsanoiu & E Turlea (2012) said that team

members in the audit team have the extensive practice

and experience in order to perform the audit and thehigh experienced team will offer high quality audit.

The authors said that experience of the team members

is one of the key factors under technical factors that

affect the quality of audit in the firms. The accountingfirms finding it very difficult to safeguard their

legitimate interests and rights as well as to hire the

team members that are skilled and they can cope up

with the quality and standards of audits of their clients


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This essay on examining the factors that affects the quality of audit in firms

provides information about the importance and the development of audit in the

recent years. This essay shows that there are three main factors that impacts upon

the quality of audit and these are institutional factors, non-compliance factors and

the technical factors. The quality of audit has been the growing and current issue

in the field of auditing as quality is highly concerned with the financial statements

is available for review to the users. The financial statements provide critical and

useful information to investors in order to make investment decisions. These

factors have clear impacts on the quality of audit and to improve the quality of

audit in firms these factors should be minimized or eliminated.


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