A review of archival auditing research

• Published in: Journal of accounting & economics 2014-11, Vol.58 (2-3), p.275-326
• Main Authors: DeFond, Mark, Zhang, Jieying
• Format: Article
• Language: English
• Subjects: Audit quality; Audit quality models; Audit quality proxies; Auditing; Auditor incentives; Audits; C42; Client incentives; Competencies; Customers; Enterprises; Evaluation; Financial reporting; Financial reporting quality; M40; M42; Proxies; Quality control; Studies
• ISSN: 0165-4101; 1879-1980
• DOI: 10.1016/j.jacceco.2014.09.002

We define higher audit quality as greater assurance of high financial reporting quality. Researchers use many proxies for audit quality, with little guidance on choosing among them. We provide a framework for systematically evaluating their unique strengths and weaknesses. Because it is inextricably intertwined with financial reporting quality, audit quality also depends on firms’ innate characteristics and financial reporting systems. Our review of the models commonly used to disentangle these constructs suggests the need for better conceptual guidance. Finally, we urge more research on the role of auditor and client competency in driving audit quality. •We define higher audit quality as greater assurance of high financial reporting quality.•We provide a framework for systematically choosing among the commonly used audit quality proxies and evaluating their results.•We review the commonly used audit quality models and conclude that more conceptual guidance is needed to disentangle audit quality from firms’ innate characteristics and financial reporting systems.•We encourage future researchers to continue expanding our knowledge of client demand-side factors, and further explore additional factors related to both auditor and client competencies.