Investigating Factors Influencing Audit Quality In India

Abstract

Audit quality is a topic of critical importance for the financial reporting industry. This research aims to explore factors influencing audit quality in India by surveying auditors and financial statement users. For the study survey method was adopted and convenience sampling technique was used to collect 181 samples from accountants, bankers, financial analysts, investors, researchers, academicians and other financial statement users in India. The questionnaire consisted of audit quality indicators and aimed at studying the perceptions of auditors and financial statement users towards the factors influencing audit quality. After application of Exploratory factor analysis the study illustrates that audit quality is influenced by 4 factors which broadly categorized as related to audit firm, audit practitioner, audit process, and audit industry & regulatory framework. Amongst the 4 factors, focusing on audit practitioner related factors, audit firm related factors and audit process related factors could yield significant improvements in audit outcomes. This study will be of use to audit industry in managing the credibility crises as it will help them understand the major drivers of audit quality according to auditors and financial statement users in India.