Challenges of the audit industry: Performance and quality

Auditing has been in the focus of management research for many years. In the course of this research numerous parameter and characteristics, which influence auditing, were identified. Amongst others, audit quality as one of them is essentially determined by the performance of the audit team, when planning and executing the audit. As audit quality is not only a theoretic concept but also strongly affects audit practice, audit firms and oversight bodies intensively address audit quality in their publications, reports and reform efforts. They specifically point out the relevance of the performance of the audit team throughout the audit. KMPG, as one of the Big 4 audit firms, also points out the relevance of both audit quality and performance. They show the importance of engagement performance as well as the performance support system that should improve professional development (KPMG, 2016). From the perspective of audit firms, audit quality is dependent on the performance of the audit team throughout the planning and conduct of an audit.

Given this background it is surprising that a joint discussion of the two topics audit quality and performance management has hardly taken place in audit research so far. Hence, this article aims to analyze from the audit industry’s and auditor’s perspective how audit quality and performance measurement interfere and how fulfilling the criteria of performance management can be ensured. The remainder of this paper is organized as follows. First we give an overview about the topic performance measurement and management. Based on the results of an on-line survey ( with a set of 25 questions) which we conducted following a quantitative approach amongst Austrian auditor companies ( registered at the official Austrian Body of Auditors ) we show the relevance and possible implementation of performance measure and performance management systems. Thereby we specifically discuss the relationship between audit quality and performance management in order to conceptually show it as a Balanced Scorecard.

The article aims at initiating the discussion on performance measurement and management for auditing companies under due consideration of audit quality.