What is audit quality, and how is it measured?

Audit quality means the audit team performs its work competently and independently, obtains sufficient appropriate evidence and issues a report that fits the findings. The IAASB’s framework considers the inputs to the audit, the process followed and the outputs produced, alongside stakeholder interactions and the circumstances of the engagement. Audit quality therefore calls for several indicators interpreted together. IAASB

Area	Example of a measurable indicator	What the indicator helps assess
People and resources	Partner and manager hours spent on areas assessed as high risk.	Whether experienced staff devoted attention to difficult judgements. Hours alone say little about the quality of that attention.
Supervision and review	Proportion of significant audit areas reviewed before the report was signed.	Whether the team had time to challenge conclusions and obtain additional evidence where needed.
Evidence and judgement	File inspection findings on unsupported conclusions, including how often the same finding recurs.	Whether the work actually supports the opinion and whether the firm has addressed earlier weaknesses.
Communication	Time taken to communicate significant findings to the audit committee, together with a review of what was communicated.	Whether those responsible for oversight received clear information in time to act.
Reporting outcome	Whether an independent file review finds that the opinion issued was appropriate in the circumstances.	Whether the final report reflects the evidence and the significance of unresolved matters.

Classroom example. Two audit teams encounter the same RM3,000 interest difference. One writes “amount immaterial” without recording its cause. The other establishes that December interest was omitted, checks whether similar year-end expenses were missed and verifies management’s adjustment. Both teams might ultimately issue an unmodified opinion. The second file provides a stronger basis for assessing audit quality because a reviewer can follow the evidence, the judgement and the conclusion.