The influence of Auditor`s Firm Professional Solvency on Quality of Key Audit Matters Judgment: Evidence from Egypt: An Experimental Study

Document Type : Original Article

Authors

1 Professor of Accounting and Auditing, Faculty of Commerce Alexandria University Egypt

2 Accounting Department Faculty of Commerce Alexandria University Alexandria Egypt

3 Assistant Professor Colleges of the Arab East - Kingdom of Saudi Arabia

Abstract

According to the recent demand from stakeholders for improving the audit report message, which reflects their desire to more understanding about the audit process and judgment for narrowing the information gap and increasing the reliability of audit report. Most studies emphasized on the final result of audit quality instead of its drivers and inputs which represented in a series of auditor judgments and decisions. The current research examines the effect of auditor`s firm solvency on key audit matters judgment quality in accordance with ISA 701, in addition to identify whether this relation is affected by moderating variables; auditor experience, continued professional education, audit firm size and registration in Financial Regulatory Authority individually and as a whole, based on a sample from audit firms in Egypt. The researchers found out that, as expected, there is positive and significant relation between the auditor`s firm solvency and key audit matters judgment quality, surprisingly there is not any significant interactive effect of the moderating variables on the main relation of research. Overall, the results suggest that it is necessary to emphasize on determinants of professional judgment quality in respect of both auditors and their firms in developing countries such as Egypt.

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