Exploration of audit quality disclosures contained in the transparency reports of audit firms
Date
2022
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
University of the Witwatersrand, Johannesburg
Abstract
Purpose: The purpose of this study is to explore the disclosure practices of audit firms
issued in the transparency reports. This study uses audit quality standards to assess
how disclosures regarding audit quality have been included in the audit transparency
reports.
Methodology: This study analysed the publicly available transparency reports of the big
4 audit firms and medium audit firms. These reports were analysed following an
interpretive approach to determining the extent of disclosure on audit quality from 2016
to 2020. This study also considered the change in disclosure on audit quality over these
five years. A disclosure checklist has been developed using professional literature.
Content analysis has been used to codify the disclosed information with disclosures
being scored using an ordinal scale. Descriptive statistics have been used to analyse
and graphically present the data.
Findings: The findings suggest inconsistencies in the preparation of the transparency
reports. The number of disclosures did not increase significantly from 2016 to 2020,
even though there was increased public scrutiny of the audit firms in the wake of audit
failures over the same period. Additionally, the big 4 audit firms provided more
disclosures compared to medium-tier firms.
Research limitations: The research is limited to the publicly available transparency
reports and, therefore, the findings are not representative of all assurance providers in
the South African market
Practical implications: The findings can be used to aid audit regulators in
understanding inconsistencies in audit firm transparency reports to develop assurance
reporting frameworks. Additionally, the findings can inform regulators of these reporting
issues about audit quality indicators.
Value: This study complements the current research by providing insight into audit firms'
disclosure practices in audit transparency reports. Current research has been focussed
on corporate governance-specific disclosures
Description
A research report submitted to the Faculty of Commerce, Law, and Management, University of the Witwatersrand, in partial fulfilment of the requirements for the degree of Master of Commerce in Accountancy, University of the Witwatersrand, Johannesburg, 2022
Keywords
Audit quality, Audit quality management system, Transparency report, Audit firms, UCTD
Citation
Raphadu, Mpya Aaron. (2022). Exploration of audit quality disclosures contained in the transparency reports of audit firms [Master’s dissertation, University of the Witwatersrand, Johannesburg].