Recognition and ranking the effective factors on audit quality via the TOPSIS technique

Subject Areas : Financial Accounting

Saeed Anvarkhatibi ¹ , Rasoul Baradaran Hassanzadeh ² , aliasghar mottaghi ³ , Hoshang Taghizadeh ⁴

1 - Department of Accounting, Tabriz Branch, Islamic Azad University, Tabriz, Iran
2 - Department of Accounting, Tabriz Branch, Islamic Azad University, Tabriz, Iran.
3 - Department of Accounting, Tabriz Branch, Islamic Azad University, Tabriz, Iran
4 - Department of Management, Tabriz Branch, Islamic Azad University, Tabriz, Iran

Received: 2022-08-31 Accepted : 2022-12-11 Published : 2023-12-01

Keywords: stakeholders and interested groups, Audit Quality, multiple attribute TOPSIS technique,

Abstract :

Audit quality is one of the most important issues in the field of auditing and the capital market. Defining a framework for determining the quality of audit is important so the present study seeks to rank and compare the factors affecting audit quality from the perspective of different groups using a multi-attribute TOPSIS technique. In this research, first, 15 influencing factors were selected as quality indicators using library studies, and then these indicators were analyzed using TOPSIS multi-attribute technique by distributing questionnaires among four groups including: researchers and faculty members, audit institutes, chartered accountants, members of the audit committee, and financial managers of the companies listed on the Tehran Stock Exchange and they were rated and compared. From the view point of the of researchers and faculty members, auditing institutes, auditing committee members and chief financial managers, the most important effective factors on the audit quality are professional level of the auditor in the industry expertise, number of employed chartered public accountants and quality control score, respectively. The results of index comparison test indicates that from the view point of the four studied groups, there is a sensible difference between 15 abovementioned indicators.

References:

[1] Moradi, M., Bayat, N., Advanced Auditing. Mashhad: Marandiz Publications, 2015.
[2] Jensen, M., and Meckling, W., Theory of the Firm: Managerial Behavior, Agency Costs and ownership structure, Journal of Financial Economics, 1976; 3(1): 305–360. doi:10.1016/0304- 405X (76)90026-X.
[3] Reichelt, K. J., Wang, D., National and office-specific measures of auditor industry expertise and ef-fects on audit quality, Journal of Accounting Research, 2010; 48(3): 647–686. doi:10.1111/j.1475-679X.2009.00363.x
[4] Probohudono, A. N., Sugiharto, B., Arifah, S., The Influence of corporate governance, audit quality, and ownership, on financial instrument disclosure in Indonesia, Journal of Contemporary Accounting, 2019; 1(3): 173–187. doi: 10.20885/jca.vol1.iss3.art5
[5] Moroney, R., Carey, P. J., Industry versus task-based experience and auditor performance, Auditing: A Journal of Practice & Theory, 2011; 30(2):1–19. Doi:10.2308/ajpt-10060
[6] Wardayati, S. M., Miqdad, M., Efendi, H. I., Arisandy, F. N., Performance improvement through inter-nal control, experience and individual rank, Journal of Contemporary Accounting, 2019, 1(2), P.107–119. doi:10.20885/jca.vol1.iss2.art4
[7] Broberg, P., Tagesson, T., Argento, D., Gyllengahm, N., Mårtensson, O., Explaining the influence of time budget pressure on audit quality in Sweden, Journal of Management, 2017. doi: 10.1007/s10997-016-9346-4
[8] Nasser, A. T. A., Wahid, E. A., Nazri, S. N. F. S. M., Hudaib, M., Auditor‐client relationship: the case of audit tenure and auditor switching in Malaysia, Managerial Auditing Journal, 2006, 21(7), 724–737, doi:10.1108/02686900610680512
[9] Davis, R., Soo, B., Trompeter. G., Auditor tenure and ability to meet, Earning Forecasts, August 2007, Electronic Journal, 26(2), doi:10.2139/44rn.1014601
[10] Mulyadi. Pengaruh pengalaman kerja, kompetensi, independensi, akuntabilitas, profesionalisme dan kompleksitas tugas auditor terhadap kualitas audit (studi empiris pada KAP Surakarta dan Jogjakarta). Jurnal Akuntansi STIE Adi Unggul Bhirawa Surakarta, 2013, 1(2), P.74–89.
[11] Nirmala, A., Putri, R., Cahyonowati, N., Pengaruh independensi, pengalaman, due professional care, akuntabilitas, kompleksitas audit, dan time budget pressure terhadap kualitas audit (studi empiris pada auditor KAP di Jawa Tengah dan DIY), Diponegoro Journal of Accounting, 2013; 2(3):786–798. ISSN : 2337-3806
[12] Wulandari, N., Rasuli, Diyanto, V., Pengaruh pengalaman, pengetahuan, audit tenure, dan peer review terhadap kualitas audit (studi empiris pada kantor akuntan publik di Pekanbaru, Batam, Padang dan Me-dan), Jurnal Jurusan Akuntansi Fakultas Ekonomi Universitas Riau, 2014, 1(2), P.1–16.
[13] Futri, P. S., Juliarsa, G., pengaruh independensi, profesionalisme, tingkat pendidikan, etika profesi, pengalaman, dan kepuasan kerja auditor terhadap kualitas audit pada kantor akuntan publik di Bali, E-Jurnal Akuntansi Universitas Udayana, 2014, 7(2), P.41–58 ISSN: 2302-8556
[14] Calocha, R., Herwiyanti, E., Factors that affect audit quality, Journal of Contemporary Accounting, Master in Accounting Program, Faculty of Business &Economics, Universitas Islam Indonesia, Yogyakar-ta, Indonesia, 2020; 2(1): 35-48.
[15] Huy, N. D., Identifying factors affecting audit quality in the context of COVID19 pandemic in Vi-etnam: Theoretical models study, Journal of Positive School Psychology, 176 – 184 ISSN, 27177564, 2022, 6(6).
[16] Nasirpour, A., Jabarzadeh Kangarloei, S., Bahri Sales, J., Badavar Nahandi, Y., Identification and ranking of the effective factors on the audit quality based on spirituality and moral atmosphere in working environment in Delphi and Shannon Entropy, Journal of Management Accountancy and Audit, 2022, P. 213-230.
[17] Lotfi Sheikh, R., Seyyed, E., Azadi, K., Identification and ranking of effective factors on public ex-pectation from accountancy, Journal of Management Accountancy and Audit, 2022; 11(41):159-176.
[18] pour Zanjani, E., Raeispour, S., Salajegeh, A., Sanjar, Investigation of the desired supervisions of the audits in Iran capital, Management Accountancy and Audit, 2022; 11(41):201-216.
[19] Dunn, K., Mayhew. B., Audit firm industry specialization and client disclosure quality, Review of Accounting Studies, 2004; 9(1): 35–58. doi:10.1023/B:RAST.0000013628.49401.69
[20] Bae, G., Choi, S., Do Industry Specialist Auditors Improve Investment Efficiency? doi:10.2139/ssrn.2145191
[21] Jensen, M., Meckling, W., Theory of firm: Managerial behavior, agency costs and ownership struc-ture, Journal of Financial. Economics. 1976; 305-360. doi:10.1016/0304-405X (76)90026
[22] Piot, C., Janin, R., External auditors, audit committees and earnings management in France, European Accounting Review, 2007; 16(2): 429-454. Doi:10.1080/09638180701391030
[23] DeAngelo, L.E, Auditor size and audit quality, Journal of Accounting and Economics, 1981; 3(3):183-199.
[24] CAQ, Approch of Audit Quality Indicators. Washington،D.C: The Center for Audit Quality (CAQ) 2014.
[25] PCAOB. 2013.Audit Quality Indicators. Washington،D.C: Public Company Accounting Oversight Board
Public Company Accounting Oversight Board Strategic Plan, 2012-2016: November 30: 2012:5.
[26] IAASB, A Framework for Audit Quality. International Audit and Assurance Standards Board (IAASB) 2013.
[27] Alavi, S. M., Ghorbani, B., Rostami W., Investigation of effective factors on audit quality in audit institutes that are members of the IICA. Audit Knowledge, 2014, 60, P.47-70
[28] AlQadasi, A., Abidin, Sh., The effectiveness of internal corporate governance and audit quality: The role of ownership Concentration-Malaysian evidence, corporate governance, The International Journal of business in institute, 2018; 18(2): 333-253. Doi:10.1108/CG-02-2017-0043
[29] Kee, H.W., Hock, O.Y., Chee, K., Corporate governance quality and audit in Malaysia, SHS Web of Conferences, 2017.doi: 10.1051/, 7340400334SHS Web of Conferences shsconf/201
[30] Salehi, M., Alinya, A., Relationship between corporate governance and audit switching: Iranian evi-dence. International Journal of Law and Management, 2017; 59(5):673-686. doi:10.1108/ijlma-02-2016-0024
[31] Beisland, L.A., Mersland, R., Audit quality and corporate governance: Evidence from the micro-finance industry, International Journal of Auditing, 2015; 19(3): 168-190. doi: 10.1111/ijau.12041
[32] Abidin, s., Ahmad-Zaluki, N.A., Auditor industry and reporting timeliness, Procedia-Social and Be-havioral Sciences, 2012; 65:873-878.
[33] Dunn, K., and Mayhew. B., Audit firm industry specialization and client disclosure quality, Review of Accounting Studies, 2004; 9(1): 35–58, Doi:10.1023/B:RAST.0000013628.49401.69
[34] Xuewen, K., Board characteristics and higher audit quality: Evidence from Chinese listed companies, International Conference on Management Science and Industrial Engineering (MSIE). Harbin, 2011; 348-352. doi:10.1109/MSIE.2011.5707733
[35] Jeff P. B., Inder K. K., Raman, K. K., Do the Big 4 and the Second-tier firms provide audits of similar quality? Contents lists available at Science Direct. J. Account. Public Policy 2010; 29: 330–352. doi:10.1016/j.jaccpubpol.2010.06.007
[36] Badiei, H., Hassah Yeganeh, Y., Thaghafi, A., Babajani, J., Audit quality test and corporate govern-ance mechanisms, Quarterly Journal of Management Accounting and Auditing, 2018; 8(31):261-271
[37] Jodi, S., Mansourfar, Gh., Information asymmetry, internal and external dimensions of corporate governance quality: promotion or weakening of audit quality, Accounting knowledge, 2018, 10th period; 3(38):199-231. doi:10.22103/jak.2019.12497.2751
[38] Kurdestani, Gh., Rezazadeh, J., Kazemi, M., Abdi, M., Investigating the impact of audit market con-centration on fees and audit quality, Financial accounting research, 10th year, 2018; 2(36):65-83
[39] Imani Barandagh, M., Mehrani, K., Hojat Shamami. R., Identifying factors that determine audit quality in Iran from the point of view of chartered accountants, Accounting knowledge, 2015; seventh year, 25:167-189
[40] Sepasi, S., Rezyat, M., Identification and ranking of factors affecting social audit using TOPSIS tech-nique, Financial Accounting, 2014; 28:127-147
[42] Momeni, M., New Discussions of Operations Research. Tehran: Ganj Shaygan Publications. (2010).
[41] Mojtahedzadeh, V., Aghaei. P., Factors affecting the quality of independent auditing from the per-spective of independent auditors and users, Accounting and auditing reviews, 2004; 38:53-76.