Purpose – The paper aims to analyse audit service quality attributes that were perceived to be important in compulsory audit tendering (CAT) in local councils in New South Wales (NSW). It focuses principally on whether CAT leads to an impairment of auditor independence and audit quality. Design/methodology/approach – A questionnaire survey was conducted of 235 NSW local council finance professionals and 35 local council internal auditors in May 2006. Findings – The most important attributes in evaluating audit service quality were industry expertise, audit firm experience with a council, technical competence, independence, ethical standards and due care. The least important attributes were scepticism, freshness of perspective, audit firm size, and non-audit services. There is considerable consistency in the findings with those in non-CAT contexts. Research limitations/implications – The paper is subject to the general limitations of the survey questionnaire method. A further limitation is that audit quality was assessed using perceptions of audit service quality by preparers of local council financial statements, rather than by users of those statements. Practical implications – Audit firms will be better able to understand the audit service quality attributes valued by local council clients, to differentiate their promotional and service-provision strategies, improve their audit quality, and better satisfy local council clients. Concerns that CAT may impair audit independence and audit quality do not appear to be founded. Originality/value – Because the results are generally consistent with findings in non-CAT contexts, there can be more confidence in CAT as a regulatory form of audit procurement.