This study used accounting enforcement actions by the Financial Supervisory Service as a proxy variable to investigate the correlations of audit quality with auditor characteristics, auditor industry expertise, auditor size, auditor tenure and the audit fee.
Thus, this study aimed to inquire into the characteristics of enforced firms using information about enterprise accounting and auditors, and for this purpose, it extracted listed corporations as sample enterprises in the settlement of accounts in December excluding financial business among the enforced firms from 2003 through 2010, and extracted enterprises with similar scale of assets in the same type of business as paired sample among the enterprises that did not receive enforcement actions for a test.
As a result of an empirical analysis, auditors with higher industry expertise and corporations affiliated with Big4 had more significance to audit quality, that is, the reception of enforcement actions, which is consistent with the results of several preceding studies that auditors with higher industry expertise and corporations affiliated with Big4 had fewer cases of enforcement actions and higher audit quality. In the meantime, of the descriptive variables, auditor tenure and audit fee did not have significance to audit quality (enforcement actions).
This study has significance that it looked into whether various measurements used as proxy variables of audit quality in a number of preceding studies would be valid as proxy variables of audit quality in an empirical study in the field of accounting.