Developing the Audit Quality Measurement Model Using Structural Equation Modeling

Iranian Journal of Accounting, Auditing and Finance

دوره 4، شماره 2، مرداد 2020، صفحه 37-53  

نوع مقاله: Original Article

شناسه دیجیتال (DOI): 10.22067/ijaaf.2020.39280

نویسندگان

Alireza Aghaie Ghehie؛ Shohreh Yazdani ؛ Mohammad Hamed Khanmohammadi

Department of accounting, Damavand Branch, Islamic Azad University, Damavand, Iran

چکیده

The purpose of the present study is to investigate the factors affecting audit quality.  For this purpose, the concepts of audit quality were extracted using the proposed conceptual model. The factors affecting audit quality, including policy-making, supervision, and operations (including the categories of input, process, and output), were identified by a systematic approach. The dimensions of supreme council independence, financial reporting requirements, audit institutions' size, industry auditor, audit fees, corporate governance system, stockbrokers or non-stockholders, thought-based auditing, formulating various industry guidelines, auditors' perceptions of governance, the use of information technology, and the establishment of a professional supervisory body constitute the conceptual model of audit quality.
After identifying and designing the primary model, a questionnaire was developed and distributed among the audit firm's partners. The audit quality measurement model was designed using Structural Equation Modeling, and the research hypotheses were identified.
According to the research results, the audit quality has a moderate positive and significant relationship with the audit profession's policy-making factors and a strong positive and significant relationship with the audit operations. Also, in terms of the operational factors, the audit quality has a strong positive significant relationship with the input, and a strong positive significant relationship with processes, and a moderately significant positive relationship with the output; finally, the audit quality has a moderately positive and significant relationship supervisory factors.
To date, the empirical evidence that justifies the validity of the influence of the factors such as policy making, supervision, and operations (including the categories of input, process, and output) all together on the development of the audit quality measurement modelin Iran has not yet to be found. 

کلیدواژه‌ها

Audit Quality؛ Corporate Governance؛ Internal Controls؛ Audit Fee؛ Supervisory Body؛ Policy-Making

مراجع

Adam, E.  Karim, J. and Shyam, S. (2018). Demand for and Assessment of Audit Quality in Private Companies. Journal of Accounting, finance and business studies, 54(35), 1-22. https://doi.org/10.1111/abac.12138

Alavi, M. Ghorbani, B. and Rostami, W. (2015). Investigating the factors affecting audit quality in the Audit Institutions of the Iranian Association of Certified Public Accountants. Auditing Knowledge, 15(60), 47-70. http://ensani.ir/file/download/article/20160528143601-9414-173.pdf (In Persian)

Constantinos, C. and Clive, L. (2008). Audit effort and earnings management. Journal of Accounting and Economics, 45(1), 116–138. https://doi.org/10.1016/j.jacceco.2007.05.002

Chen, Y. and Hsu, J. (2010). Auditor Size, Auditor Quality, and Auditor Fee Premiums: Further Evidence from the Public Accounting Profession.  SSRN Electronic Journal, Doi: 10.2139/ssrn.1325049

David, C.M. Josep, G.B. and Monica, M.B. (2019). Auditor Independence, Current and Future NAS Fees and Audit Quality: Were European Regulators Right?. European Accounting Review, 29(2), https://doi.org/10.1080/09638180.2019.1577151

DeAngelo, L. (1981). Auditor size and auditor quality. Journal of Accounting & Economics, 3(3), 183-199. https://doi.org/10.1016/0165-4101(81)90002-1

Fung, S.Y.K. Raman, K.K. and Zhu, X. (2017). Does the PCAOB international inspection program improve audit quality for non-US-listed foreign clients?. Journal of Accounting and Economics, 64(1), 15-36. https://doi.org/10.1016/j.jacceco.2017.04.002

Henock, L. (2005). Acquirers Abnormal Returns, Audit Firm Size and the Small Auditor Clientele Effect. Journal of accounting and economics, 18-52. Doi: 10.2139/ssrn.483662

Hasas Yegane, Y. and Azin Far, K. (2010). Relationship between Audit Quality and Audit firm size. Accounting and Auditing Reviews, 17(61), 83-98. https://www.sid.ir/fa/journal/ViewPaper.aspx?id=131407 (In Persian)

Mohamed A. Hegazy, M. and Samy, M. (2019). The Impact of Auditor Industry Specialization on the Retention and Growth of Audit Clients. Journal of Ain-Shams University, 2(20), Doi:  10.21608/atasu.2016.48624

Murat, O. (2018). The Impact of Auditor Education Level on the Relationship Between Auditor Busyness and Audit Quality in Turkey Cogent Business and Management. Forthcoming Posted, 5(1), https://www.tandfonline.com/doi/full/10.1080/23311975.2018.1517588

Mohammad Rezaie, F. and Yaghoub Nejad, A. (2017). Audit Firm Size and Audit Quality: Theoretical Criticism, Critique of Research Methodology and Suggestion. Financial Accounting and Auditing Research, 9(36), 31-60. http://faar.iauctb.ac.ir/article_533515.html (In Persian)

Mashayekhi, B. Mehrani, K. Rahmani, A. and Madahi, A. (2013). Formulation of Audit Quality Model. Quarterly Journal of Stock Exchange, 6(23), 103-137. http://ensani.ir/file/download/article/20140722134653-9455-98.pdf (In Persian)

Mohammad Rezaei, F. and Mehrabanpour, M.R. (2016).Auditor Report Type and Number of Audits: The Effect of Ranking of Trusted Audit Institutions. Accounting and Auditing Management Knowledge. 5(17), 65-77. https://www.sid.ir/fa/journal/ViewPaper.aspx?id=472071 (In Persian)

Nikbakht, MR. and Mahmoudi Khoshroo, O. (2017). investigating the Factors Affecting the Audit quality in Iran with regard to the Indicators of Public Company Accounting Audit Board (PCAOB). Accounting and Auditing Reviews, 24(3), 441-462. https://www.sid.ir/fa/journal/ViewPaper.aspx?id=467849 (In Persian)