Assignment on Audit Quality Assessment Process

Added on - 21 Apr 2020

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Running head: AUDITINGAuditingName of the StudentName of the UniversityAuthor’s Note
1AUDITINGAuditing is the process to conduct a formal inspection on the financial and accountingstatements of the companies. For this reason, business organizations consider auditing as one ofthe major drivers for success for their business organizations. It is the responsibility of theauditors to make it sure that the financial statements of the companies are free from any kind ofmaterial misstatement (Arens, Elder and Mark 2012). In the audit process, the auditors arerequired to maintain the quality of audit and this is an important aspect. In order to maintain thequality of audit, the auditors are required to conduct audit assessment plan for the businessorganizations. In this context, it is needed to be mentioned that certain factors create impact onthe quality of audit in the corporations. These factors are crucial factor and thus, the auditors arerequired to consider all these factor at the time of assessing the audit quality (William Jr, Gloverand Prawitt 2016). The audit quality assessment process can be seen in both internal and externalaudit processes. Hence, the main objective of this study is to conduct an analysis and evaluationof various factors related to audit quality and audit quality assessment.There are certain factors that have major impacts on the audit process of the businessorganizations. These factors are considered as the Drivers of Audit Quality.
2AUDITINGFigure 1: Drivers of Audit Quality(Source: ifac.org 2017)From the above figure, it can be seen that there is a certain framework for audit quality.According to the above figure, it can be seen that there is an interrelation among process, inputand output. The above discussion also shows the fact that there are certain contextual factorsaffecting the quality of audit process. All these major factors are discussed below:The first factor isBusiness Practice and Commercial Law. Different kinds of businesspractices have their impacts on the quality of audit processes. The formal way in which thebusinesses are undertaken affect the audit quality of the companies. On the other hand, it can beseen that various commercial laws use to affect various procedures of audit operations. It needs
3AUDITINGto be mentioned that the auditors have to comply with various business and commercial laws forconducting the audit operations. The second important factor isLaws and Regulations relatedto Financial Reporting. Various statutory laws and regulations have direct impact on the qualityof audit processes (archive.treasury.gov.au 2017). In this process, it needs to be mentioned thatthe auditors of the companies have to conduct the audit operations of the companies bycomplying with the regulations and laws. For this reason, the auditors have to undertake certainprocedures for conducting the audit operations. For this reason, the quality of audit process canbe affected. The next major factor is theFinancial Reporting Framework. Financial reportingframework is considered as a critical factor in case of maintaining the quality of audit processes.It needs to be mentioned that the auditors are able to take effective audit decisions in thepresence of clear and sound financial reporting framework. At the same time, a complexfinancial reporting framework makes it difficult for the auditors to understand various accountingand financial requirements of the companies. Due to this reason, the quality of audit can beaffected. Another major factor isCorporate Governance. Corporate governance is consideredas a major driver for audit quality. Effective corporate governance strategy helps theorganizational managers to disclose accurate and reliable financial information and thisinformation is a great helps for the auditors to make effective audit opinion. In the absence ofeffective corporate governance in the companies, organizational managers will not be able to getaccess to the true and reliable financial information of the companies. Due to this, the quality ofaudit can be affected.Another important factor isOrganizational Information System. It is required to havesound information system for the auditors to maintain the quality of audit program. At the timeof maintaining the audit operations, the auditors needs true and fair financial as well as
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