Audit quality differences amongst audit firms in a developing economy, Journal of

Accounting in Emerging Economies

Differences in audit quality have a significant role in appointment decisions and a high retention

rate in obligatory audit tenders. Lawrenceet al. (2011) argue that wrongly identifying Big 4 audit firms

as superior to non-Big4 audit firms may have unintended consequences for smaller auditors, such as

selection bias by audit committees. Due to the long-standing requirement for reliable audited financial

statements as a basis for decision-making by diverse user groups, such as shareholders, regulatory

agencies, governments, and creditors, among others, audit quality continues to attract the attention of

scholars and policymakers. Previous research has found no uniform method of measuring audit

quality and has been unclear on whether audit quality differs between organizations.

In the case of Uganda, audit quality, according to the researchers, is a multi-dimensional

construct comprised of degrees of discretionary accruals, audited accounts' conformance with

accounting standards, rules, and regulations, and audit fees. They discovered that Big 4 audit firms

provide more compliance with accounting standards, legal requirements, and other regulatory

requirements than SMPs based on these three criteria. When all three audit quality criteria are

considered together, no significant variations in audit quality levels between Big 4 companies and

SMPs are found.