Strengthening Accountability: A Strategic Framework for Audit Firm Governance Excellence

Project Description

Background: Global capital markets have experienced frequent audit failures in recent years.
If an audit fails, it adversely affects investor confidence, widening the audit expectation gap and leaving a lasting impression on auditors and the audit profession as a whole. During the year 2022, the FRC issued fines of £33.3m, a 77% increase from the year prior due to audit failure (Noble, 2023). Audit firms can fail for various reasons, and governance issues are among the contributing factors. Despite all the efforts by internal governance (Audit Firm Governance Code) and external governance such as ASIC, MOF, CICPA, PCAOB, and CPAB that have been made to improve audit firm governance, there are still some audit failures. This means that there is still room for improvement. We need more high-quality research on audit firm governance so that we can make better decisions about how to improve it. Strengthening audit firm governance is an effective way to reduce audit risks, increase market share, and restore investors’ trust. By doing so, we can avoid future audit failures and ensure the protection of a broader range of stakeholders through responsible and sustainable auditing.

Objectives:
Objective 1: Identify gaps and weaknesses in current governance structures contributing to audit failures, with a focus on understanding the root causes and areas for improvement.
Objective 2: Formulate actionable strategies and recommendations to strengthen audit firm governance
Objective 3: Disseminate the research findings and recommended governance strategies through academic publications, knowledge transfer events, and targeted workshops.