Showcasing Audit Quality through Voluntary Public Disclosure of Audit Quality Indicators

Abstract

: Public accounting firms continuously invest significant resources into enhancing audit quality. In this paper, we summarize Brown and Popova’s (2019) key findings related to public disclosure of audit quality indicators (AQIs) and discuss important implications for audit practitioners. Specifically, we discuss the current landscape of AQI disclosure from a regulatory and practitioner standpoint, and we provide recommendations for audit practitioners to consider when developing their own framework for AQI disclosure. Finally, we discuss how important stakeholder groups such as individual investors are influenced by AQI disclosures when making significant decisions concerning the audit firm (e.g., making auditor ratification decisions) and the audit client (e.g., making investment changes). The insights provided in our summary inform audit practitioners on how to showcase their audit quality enhancement efforts through voluntary AQI disclosure. SUMMARY: Public accounting firms continuously invest significant resources into enhancing audit quality. In this paper, we summarize Brown and Popova’s (2019) key findings related to public disclosure of audit quality indicators (AQIs) and discuss important implications for audit practitioners. Specifically, we discuss the current landscape of AQI disclosure from a regulatory and practitioner standpoint, and we provide recommendations for audit practitioners to consider when developing their own framework for AQI disclosure. Finally, we discuss how important stakeholder groups such as individual investors are influenced by AQI disclosures when making significant decisions concerning the audit firm (e.g., making auditor ratification decisions) and the audit client (e.g., making investment changes). The insights provided in our summary inform audit practitioners on how to showcase their audit quality enhancement efforts through voluntary AQI disclosure.