An examination of the audit quality difference among big 4 audit firms in Kenya (an audit committee's perspective)
Date
2013-06
Authors
Gitare, David K.
Journal Title
Journal ISSN
Volume Title
Publisher
Strathmore University
Abstract
The purpose of this study is to examine whether audit quality differences exist among the
Big 4 audit firms in Kenya. The study also evaluates the extent to which audit committees
(ACs)review the quality of work of the external auditor as required by the Corporate
Governance Guidelines(CGGs)provided by the Capital Markets Authority(CMA). One
way Analysis of Variance(ANOVA)technique is used to evaluate audit quality
differences among Big 4 audit firms based on the questionnaire responses obtained from
AC members of companies quoted on the Nairobi Securities Exchange(NSE). Percentage
analysis is used to assess the extent to which ACs perform certain quality review checks
on the work of external auditors as per the Centre for Audit Quality(CAQ)tool. This
study contributes to the body of audit quality literature by examining audit quality using a
new tool developed for ACs by the Centre for Audit Quality(CAQ). This methodology is
in contrast to other audit quality proxies such as frequency of litigation occurrences, audit
fees. Audit tenure. size of discretionary accrual. Extent of IPO under pricing and
frequency of financial statement restatements that have been used in prior audit quality
research. The study finds that there are no statistically significant audit quality
differences among the Big 4 audit firms in Kenya. The study confirms the proposition
used in prior researches on audit quality that Big 4 audit firms provide homogeneous audit
quality. The study also Ends that ACs, to a large extent, review the quality of work of
external auditors as per the CAQ tool.
Description
Submitted in partial fulfillment of the requirements for the Degree of Master of Commerce
Keywords
Auditing, Auditing quality, Kenya