Abstract
This paper presents a comprehensive literature review on external audit quality, a critical construct underpinning the integrity of financial reporting and the credibility of corporate governance. Despite its foundational importance, audit quality remains a conceptually contested and empirically complex domain, shaped by multifaceted interactions among auditor attributes, client characteristics, institutional environments, and emerging technologies. Drawing on seminal and contemporary scholarship, this review synthesizes key theoretical frameworks and empirical findings to elucidate the determinants, proxies, and consequences of audit quality. The analysis reveals consistent associations between audit quality and factors such as auditor size, independence, industry specialization, and legal enforcement, while highlighting nuanced effects for variables such as tenure and audit fees. The review also evaluates the effectiveness of common measurement proxies, including discretionary accruals, restatements, and composite indices, and examines the role of audit quality in curbing earnings management, enhancing financial performance, and reinforcing stakeholder trust. The paper concludes by identifying key gaps in the literature and offering policy and practice-oriented recommendations aimed at improving audit effectiveness in a dynamic global environment. This synthesis provides a structured foundation for future research and contributes to ongoing debates regarding regulatory reform and audit innovation.
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