Audit quality indicators: Perspectives from Non-Big Four audit firms and small company audit committees

M. Kathleen Harris and L. Tyler Williams

Advances in accounting, 2020, vol. 50, issue C

Abstract: Through a combined study, we explore the professional perspectives of two distinct PCAOB constituent groups related to the PCAOB's proposed regulatory approach for audit quality indicators. First, we examine the comment letters of Non-Big Four audit firms and find that this specific constituent group views most of the PCAOB's proposed audit quality indicators as infeasible and redundant. Further, Non-Big Four audit firms contend that the indicators require greater clarification from the regulator as well as substantial accompanying qualitative context to avoid misinterpretation that may lead to unintended consequences. Second, we survey a collection of audit committee members from small, publicly-traded companies regarding the current evaluation and perceived effectiveness of eleven specific PCAOB audit quality indicators, each of which is well-established in the extant audit quality literature. We find indicators related to auditor personnel with specialized skill and knowledge, experience of audit personnel, and the timely reporting of internal control issues are perceived to possess the highest level of effectiveness in the evaluation of audit quality.

Keywords: PCAOB; Audit regulation; Audit quality indicators; Audit committees; Non-big four audit firms (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:advacc:v:50:y:2020:i:c:s0882611020300559

DOI: 10.1016/j.adiac.2020.100485

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