Audit Quality and Independence: Key Drivers and Initiatives

AUDITING

ABSTRACT
The current global scenario accepts the fact that the financial statements of a reporting entity
needs verification from an independent third party to ensure their transparency and reliability.
Such third party role in Australia is played by the company auditor. For considering a report
to be market credible and reliable, there are two things to be considered :
 The auditor should be independent of his clients amd and should be clear about his
objectives regarding the audit work ; and
 The audit must be qualitative and therefore, a 'quality audit' should take place.

INTRODUCTION
As such we do not find an appropriate definition of 'audit quality' but the fact that it includes
a number of factors that are inter related such as the legal framework within which the
professionals have to work, the obligation of applying ethical standards into professionalism,
the professional skills and qualities of the auditors and their team, ASIC (Australian
Securities and Investments Commission) 's activities and such other bodies playing a role in
the audit review process. There are also other drivers of audit quality that relates to the
processes and practices opted within the auditing firms such as the cultural framework, the
quality of the audit processes that includes expertise knowledge and experience of the
auditors and the methodology of audit opted by the firms (Eliskandarani, 2014).
Audit quality plays an important role for maintaining efficiency in the market environment:
 An audit quality, being a reflection of an independent opinion by an auditor, instills
confidence and trust in one's financial reports which is essential for an efficient
market ;
 The importance of qualitative audit is important for confidence in the market and
prudential supervision as highlighted by the Basel Committee on Banking Supervision
;
 According to FSB (Financial Stability Board), external auditor plays the most crucial
role for instilling confidence in the market and contributing towards financial
stability.