DO AFFILIATED AUDIT FIRMS IN INDONESIA MEET GLOBAL QUALITY BENCHMARKS?

Abstrak

The global business environment's increasing complexity necessitates audit firms to continually evolve competent quality control systems. High-quality audit and assurance services are vital for fostering trust among financial report stakeholders. The System of Quality Management (SOQM), adopted by audit firms, aims to enhance transparency, accountability, and credibility while minimizing risks and ensuring compliance with the highest quality standards. In response to the International Auditing and Assurance Standards Board's (IAASB) mandate, Indonesian audit firms are transitioning to SOQM, replacing the previous standard, SOQC. This transition emphasizes the importance of aligning with globally recognized quality management standards. However, there are variations in implementation due to the diverse nature of audit firms, highlighting the need for investigation. This study investigates whether affiliated audit firms in Indonesia meet global management quality benchmarks, focusing on standards outlined in ISQM 1, ISQM 2, and ISA 220 (Revised). The research distinguishes between firms affiliated with Big 4 and Non-Big 4 entities to assess their performance across key areas such as risk assessment, engagement quality reviews, and engagement partner responsibilities. Data were collected through structured surveys and analyzed using statistical methods to compare mean scores between the two groups. Findings indicate that Big 4 firms consistently demonstrate higher adherence to global standards, leveraging extensive resources, structured methodologies, and robust organizational frameworks to uphold stringent audit quality. However, the study identifies the impact of the busy season on audit practices as a significant limitation, influencing participant availability and potentially affecting data quality. The study concludes by recommending strategies for audit firms to enhance operational resilience, resource management, and continuous improvement initiatives to sustain high audit quality throughout varying operational demands.