Impact of corporate governance system in audit firms on audit quality

Document Type : Original Article

Authors
Behzad Beygpanah 1
Hamideh asnaashari 2
Abbas Hoshi 2
Gholamhosein Asadi 3
1 P.hd student in accounting. faculty Accounting & management. shahid beheshti university. tehran. iran
2 Assistant Prof. in accounting, Faculty of Management and Accounting, Shahid Beheshti University, Tehran, Iran
3 Associate Prof. in accounting, Faculty of Management and Accounting, Shahid Beheshti University, Tehran, Iran
Abstract
The purpose of the study is to examine the impact of corporate governance in audit firms on audit quality. The study population consisted of clients and audit firms that are the member of the Iranian Association of Certified Public Accountants, from which 117 clients and 42 audit firms that met the selection criteria were selected. In order to measure the audit quality using discretionary accruals and measure the corporate governance structure of audit firms, nineteen indicators were used in three sections including observance of partners' rights (two indicators), board structure (two indicators) and quality of disclosure (fifteen indicators). Data were collected by reviewing the internal status of audit firms and using a checklist tool. The results showed that the governance structure of audit firms is significantly related to the level of audit quality, so that firms with effective board structure, partners' rights compliance, and high disclosure quality, provide a higher audit quality to clients. The results show that the improvement of corporate governance structure of audit firms leads to enhance audit quality, and audit firms with appropriate corporate governance structure seek to upgrade and higher quality control score. The relationship between audit firm size and auditor age with audit quality was not found. This research provides valuable insights into the development of theoretical foundations of corporate governance in audit firms. This can help the audit profession and standards setters to make rules and regulations more practical.
Keywords
Audit quality
corporate governance structure
audit firm size
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