Proceedings

would make public this anomaly”. In this regard, some authors conclude that an audit
report would be qualitative only if it is the result of a competent audit process and of
an independent one, technically speaking (Citron & Taffler, 1992). Research studies
of Nichols and Smith (1983), Knapp (1991), Kaplan (1995), Lennox (1999) retained
this demarche defining audit quality according to technique competence (the quality
to detect frauds and errors) and to auditor’s independence (the quality to reveal errors,
to make them known). The Big 8 CPA firms supply a higher level of audit quality
than do smaller CPA firms because the Big 8 possess technological advantages that
lead to the detection of more material errors in client financial statements (DeAngelo,
1981). Furthermore, Big 8 auditors are viewed as being more independent as they
have greater reputation at stake. Committee’s members could understand the
difference between the oversight function of the committee and the decision-making
function of management and must be willing to challenge management when
necessary (Blue Ribbon Commission Report, 1999). In other words, DeAngelo (1981)
argues that larger audit firms have a greater investment in the reputation capital. In
order to protect their investment, audit firms are likely to provide higher quality
audits. There is a lower incidence of litigation against Big Eight auditors than against
non-Big Eight ones (Palmrose, 1988) and also a positive relation between board size
and financial fraud (Beasley, 1996). A smaller board is more effective at fulfilling a
controlling function whereas larger boards are easier for the CEO to control. The
characteristics of audit committees influence negatively the significance when board’s
characteristics are included (Carcello & Nagy, 2004). The reports of the
ineffectiveness in audit quality evaluation have driven both the professional and
academic world to rethink the current rules and mechanisms for audit quality
assessment and to debate this subject and its measurability.
From another perspective, Chemangui (2004) arrives to assess audit quality according
to auditor’s quality, the auditor being viewed as an individual or as a group of
individuals. By extending the approach area, other researchers have studied the
indicators of audit quality according to auditor’s fees (Malone & Roberts, 1996;
David et al., 2006) or to his reputation (McNair, 1991; Palmrose, 1988; Moizer,
1997). At the same time, audit quality could depend on organizational characteristics
of audit committee. The members of audit committee could have different motivations
for improving the quality of audit process (Power, 1995). The authors cite a number
of quality indicators such as: human resource (Wooten, 2003), quality control (Prat dit
Hauret, 2000; Malone & Roberts, 1996), expertise (Wooten, 2003), professional
negligence affecting audit quality (Malone & Roberts, 1996; McNair, 1991). Even
audit committee’s size has a significant impact on financial reporting (Felo et al.,
2003). Their results highlight the idea that there is a positive relation between the
audit committee’s size and the quality of financial reporting, although studies realized
by Abbott et al. (2004) as well as those of Bedard et al. (2004) infirmed the
affirmation above. On the other hand, a company could have problems connected to
its financial statements when there is not a frequency in meetings of audit committee’s
members (McMullen, 1996). Therefore, this paper sustains that the frequency of this
meetings could improve and intensify the control of financial reporting process.
The assessment of audit quality imposes some conceptual and empirical limits
influencing financial information credibility. Some limits are linked to the risk of
compliance with management (Fama & Jensen, 1983a; Craswell, 1988); others are
reported to the characteristics of identified indicators (very simplistic indicators or
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