ACC3600 Auditing & Assurance: Staffing Decisions and Audit Quality

This report provides an analysis of a research article focusing on the impact of inspections, rotations, and client preferences on staffing decisions within audit firms. The key audit area discussed is the quality of audit services and factors affecting it, such as regulatory focus, customer preferences, and auditor rotations. The research findings, based on a primary study of 106 auditors, indicate that staffing decisions directly impact audit quality and are influenced more by regulatory requirements than staff skills. The report suggests that audit firms should prioritize skills and business nature when staffing audits and that regulatory bodies should implement rules like auditor rotation and inspections across all business types. Shareholders should also have the ability to appoint auditors based on reputation and staff expertise. Desklib offers a wealth of solved assignments and study resources for students.

A. Describe in your own words what the research article is about.
Main purpose of the research article is to evaluate the impact of investigations, rotations and
client preferences on staffing decision taken by an audit firm. Here staffing decision means
the type of employees sent by audit firm to conduct audit of a particular firm and factors like
skills and knowledge of employees are considered in the process of staffing.
B. Key audit areas discussed
The key are of audit discussed in this report is the quality of audit service provided by an
organisation and factors that can affect the quality of such audit engagement. Regulatory
focus of auditing authority has increased over the period of time and these regulatory
authorities are vigilant on quality of service provided by the auditor to their clients. Today
these regulatory authorities have access to files of auditor and they can review the work
conducted by these audit firm with the help of these audit files (Knechel, W. R., & Salterio,
2016). Other key factors that can affect staffing by audit form for a particular audit are
customer preference and rotations of auditor to enhance the level of independence in auditors.
This type of assessment is very important as it will help in ascertain how regulatory
authorities can amend their rules and regulations in order to increase the quality of services
provided by audit firms so that number of frauds and errors in financial statements can be
eliminated.
C. Findings of the article and critical opinion
For the purpose of collecting primary information, 106 auditors were selected which
comprises of 8 partners, 90 managers and 8 seniors from different audit firms. According to
the results of this primary research it was concluded that staffing decision taken by
management of the company has direct impact on the overall quality of audit engagement
entered into by the business organisation. It was also identified that rotation of auditors and
inspections on work done by auditor are the two additional factors that affects quality of audit
services provided by the auditor. According to this research, major factors that affects the
staffing decisions in audit are based on the regulatory requirement applicable on the business
organisation rather than skills and knowledge of the staff (Moroney, Knechel & Dowling,
2017).

This type of research are very important for regulatory authorities of audit in a particular
country as these researches will help in making rules and regulations to improve the quality
of audit.
D. Suggestions
Yes the results and analyses of the results of this study has direct impact on regulatory for
auditing professionals and audit regulators. It is essential for audit firms that they start
staffing for audits according to nature of business and skills of staff that are dispatched for a
particular audit. For example if nature of a small business organisation is complex then it is
essential that audit form should sent skilled and experience staff for such audit engagement
(Silverman, 2016). Just because rules and regulations applied by regulatory authorities on
such small business are lower, audit forms should not sent inexperienced staff for conducting
audit in order to save cost. Regulatory authorities should also make some rules like rotation
for auditors and inspection of audit firms in respect of audits done on every class of business
organisation (Roy & Saha, 2018). Shareholders of the company should be able to appoint
auditor according to reputation and type of staff employed by the audit firm.

References
Knechel, W. R., & Salterio, S. E. (2016). Auditing: Assurance and risk. Routledge.
Moroney, R., Knechel, W. R., & Dowling, C. (2017). The effect of inspections, rotations and
client preferences on staffing decisions. Accounting & Finance.
Roy, M. N., & Saha, S. S. (2018). Respondents’ Perceptions on Quality Control Procedures
for Statutory Financial Audit: A Survey. In Statutory Auditors’ Independence in Protecting
Stakeholders’ Interest (pp. 355-403). Palgrave Macmillan, Cham.
Silverman, D. (Ed.). (2016). Qualitative research. Sage.