Towards an Understanding of Audit Quality

Abstract

This study explores perceptions of audit quality (AQ) and audit quality indicators (AQIs) in Saudi Arabia. AQ and AQIs are explored from the perspectives of external auditors, members serving on the boards of directors of Saudi listed companies (BoDs), and members of the Professional Practice and Quality Review Committee (PPQRC) of the Saudi Organisation of Chartered and Professional Accountants (SOCPA). This research focuses on how these stakeholders define AQ and AQIs, and how Western auditing practices have shaped perceptions of AQ and AQIs in the Saudi context. A mixed-methods research design is used to collect and analyse data. Data from a questionnaire issued to 200 participants are descriptively analysed and semi-structured interviews undertaken with 34 participants are thematically analysed. The findings reveal general shared perceptions of AQ among the participants, despite their different interests. The study finds that AQIs in Saudi Arabia are predominantly associated with the auditor and the audit firm, and Western auditing practices have a strong influence on perceptions. The International Financial Reporting Standards/International Auditing Standards (IFRS/ISAs) also shape perceptions of AQ and AQIs in the local environment. The study contributes on multiple levels. Theoretically, it provides a deeper understanding of AQ and AQIs in the Saudi context. Methodologically, it advances research by employing a mixed-methods design that integrates quantitative and qualitative approaches in the Saudi context. Empirically, it contributes in its field of research by exploring the role of Western auditing practices in shaping AQ and AQIs in Saudi Arabia. Practically, it provides insights for auditors, BoDs, and regulators for improving audit quality practices in Saudi Arabia. It also serves as a reference guide for future research within the Gulf Cooperation Council (GCC) and other developing countries. Keywords: audit quality, perceptions, indicators, Saudi Arabia, external auditors, Board of Directors, SOCPA, Western auditing practices, international standards, IFRS, ISA.