An Alternative Perspective on the Measurement of Audit Quality

The extent to which audit quality meets the expectations of stakeholders can lead to heated debates. One reason is that the level of attained audit quality is comprised of objective and subjective elements. In this paper we propose a set of measures defined by the output the user of financial statements expects: error detection and correction and opinions/advice based on sufficient audit evidence. We argue that detection/correction and opinions are determined by input factors like adequate effort and team composition and choice of the adequate procedures. These audit-firm choices, in turn depend on an adequate assessment of the auditee characteristics by the audit firm which assessment, in turn, is determined by the structure or the audit firm itself.