Determinants of Audit Quality in Private Audit Firms of Ethiopia
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Date
2020-06
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Publisher
A.A.U
Abstract
There are numerous studies made on the determinants of audit quality, but their findings
and conclusions are inconsistency or inconclusive implying the need for further research
in the same area. Besides, internal control of auditee and number of staffs assigned in an
audit engagement are under-researched determinants of audit quality. This study, thus,
analyzed the determinant of audit quality in private audit firms of Ethiopia taking audit
tenure, audit fee, internal control of auditee, accountability of external auditors, and
number of staff assignment in an audit engagements as determinants of audit quality. The
study adopted a quantitative research approach to test its working hypothesis. The target
population of the study were 122 licensed and registered private audit firms in Addis
Ababa. Primary data were collected from the 55 sampled private audit firms of Ethiopia
through questionnaire and structured interviews. Data from structured interviews were
obtained from the principals/Partners of audit firms. Secondary data were also collected
from the financial reports of auditees of the sampled audit firms to measure audit quality
using discretionary (abnormal) accrual of management earnings as a proxy. The
collected data were analyzed by using SPSS Statistics version 25, Linear multiple
regression analysis, and descriptive statistics. The results of linear multiple regression
analysis showed that audit tenure, internal control of auditees, and number of staffs
assignment per audit engagements have positive and statically significance impacts on
audit quality of private audit firms of Ethiopia. While, audit fee and accountability of
external auditors have statistically insignificance impacts on audit quality of private
audit firms of Ethiopia. Accordingly, recommendations to private audit firms, auditees
and their shareholders and suggestions for future research are provided.
Description
Presented In The Partial Fulfillment For
Requirement In Award Of Master Degree In
Accounting And Finance
Keywords
audit quality, audit tenure, audit fee,, Accountability of external auditors,, Number of staff‟s assignment in audit engagements