Issues Related to Audit Quality in Australia

Running head: AUDITING AND ASSURANCE SERVICES
Auditing and Assurance Services
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1AUDITING AND ASSURANCE SERVICES
Synopsis
The main topic of this essay is to discuss about the issues raised related to audit quality in
Australia. The essay takes into consideration the aspects that improve as well as affect the audit
quality. For example, utilization of advanced technology leads to the improvement of audit
quality while the presence of conflict of interest is a major concern for audit quality. In order to
accomplish the objective, this essay undertakes the analysis of different articles discussing about
factors that have impact on audit quality. This essay concludes that deteriorating audit quality is
affective the performance of the big four audit firms in Australia; therefore, there is an increased
necessity to introduce set of inititiatives that would lead to the improvements in audit quality in
Australia.

2AUDITING AND ASSURANCE SERVICES
Introduction
Auditing refers to the process to inspect as well as examine the financial statements and
financial records of the business organizations in order to make sure they are free from material
misstatements and they have been prepared as per the correct accounting rules and regulations
(Knechel & Salterio, 2016). Providing quality audit is considered as one of the main
responsibilities of the auditors. There is not any exact definition of audit quality, but it is
believed that a quality audit has been carried out when there has been proper systematic
examination of the quality system carried out by the internal or external auditors to maintain the
quality of the financial statements. Quality audit helps in showing the actual financial
performance and position of the business organizations (Gul, Wu & Yang, 2013). However, in
the recent years, audit quality has been a major issue due to the events of global financial crisis
and business failure of large corporations all over the world where the auditors failed to deliver
quality audit in the presence of many reasons. The same issue can be seen in Australian also
where audit quality is a major concern. The main aim of this essay is to discuss about different
factors having impact on the audit quality in Australian.
Discussion
The above discussion states that audit quality is a crucial aspect in the audit profession
and the auditors must start to consider the role of audit quality in the broader concept of quality
financial reporting. The following discussion discusses about different concerns related to audit
quality.

3AUDITING AND ASSURANCE SERVICES
Impact of Advanced Technology on Audit Quality
The article named “How Advanced Technologies May Improve Audit Quality” discusses
about the possible improvements in the audit quality due to the use of advanced technologies like
Artificial Intelligence (AI), cloud and data and analytics (forbes.com, 2019). According to a
recent survey by KPMG, more than 94% corporate faineance executives believe that the use of
advanced technologies in auditing improves the audit quality. The auditing firms have taken this
matters seriously as they have spent around $5 billion a year on the implemented of advanced
technologies in auditing. It can be observed that the auditors are using certain primary advanced
technology related tools in the audit engagement programs; they are AI, visualization and robotic
process automation (RPA). The auditors have to deal with huge amount of unstructured data and
this is increasing at the rate of 40% to 50% per year. Here comes the role of AI that assists the
auditors in the systematical mining of these internal and unstructured data sources which enable
the auditors in seeing the suspicious features of this data that has been overlooked over the years.
In this manner, the use of AI increases the comprehensiveness of the audit. The use of data
visualization helps in graphical representation of data for absorbing information in better manner
(Lim, 2013). It helps in identifying trends and understanding unstructured data sources which
provides the auditors with more insight in the transaction systems and trends. RPA assists the
auditors in capturing and interpreting a transaction, manipulating data, sending standardized
responses, automating communication and others. Therefore, it can be seen that the auditors can
get great assistance from the advanced technologies that enhances audit quality. However, one
aspect that needs to be considered is that the audit team must effectively guide these technologies
in analyzing the data for enhancing audit quality (Senft, Gallegos & Davis, 2016). It is also
needed to mention that these technologies cannot replace the knowledge, judgment and