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Introduction
This study provides evidence on the current state of practice for many audit quality indicators (AQIs) recently developed by the Public Company Accounting Oversight Board (PCAOB or Board, 2015a). Currently, a standardized audit quality (AQ) framework does not exist for US audit markets. Therefore, academia, practitioners and others typically use the UK's Financial Reporting Council's (FRC) AQ framework as a guide in measuring AQ (Johnstone et al. , 2014)[1]. Developing a standard framework is on the agenda of domestic and international regulators and standard setters (USA Department of the Treasury, 2008; The Center for Audit Quality, 2012, 2013; PCAOB, 2013b, 2013c; International Auditing and Assurance Standards Board, 2013) and audit firms (KPMG, 2011). An AQ framework, when appropriately used in an integrated audit, offers many benefits to the public because it will provide comparative information about audit firms with the intention of driving a more vibrant market for quality audit services and help investors better evaluate the AQ associated with the financial statements of current and potential investments (PCAOB, 2015a).
The PCAOB (2015a) recognizes the complexity of AQ and the need for a meaningful set of AQIs to support an appropriate standardized AQ framework. Defining AQ solely by audit failures or by relying on audit outcomes limits our ability to understand and assess AQ (Francis, 2011). As part of its 2012-2016 strategic plan and goals to serve the public interest, the Board is developing an AQ framework and has proposed examples of AQIs in terms of audit professionals, audit process and audit results (PCAOB, 2013b, 2013c, 2015a). Without AQIs, it is challenging to assess AQ because of lack of transparency in the audit process (PCAOB, 2015a, p. 3). The PCAOB's (2015a, p. 1) concept release states AQIs "may provide new insights about how to evaluate the quality of audits and how high quality audits are achieved" and "may also stimulate competition among audit firms focused on the quality of firms' work and, thereby, increase AQ overall". The implicit expectation is audit firms will vary on the AQ dimensions. This is emphasized as the PCAOB (2015a, p. 3) further indicates "the promise of AQIs, in generating insights into the foundations of AQ, both within and among firms and in creating incentives for competition in...