The study investigates the impact of audit committee members’ competence on the ethical aspects of external audits and its influence on the audit quality of Public Interest Entities (PIEs). Using a mixed-method approach, including surveys with respondents at audit firms and PIEs in Europe and semi-structured interviews with participants at PIEs in Europe, the findings highlight the importance of pre-appointment training for audit committee members, concerning the external audit ethics. This pre-appointment training would enable audit committee members of PIEs to evaluate whether external auditors and audit firms have implemented appropriate safeguards and mitigations to ensure ethical audit practices of PIEs. The study recommends stringent global regulatory provisions mandating specific guidelines for PIE audit committees for assessing external auditor independence and minimizing potential conflicts of interest, to preserve audit quality of PIEs.

Implications for East Asian audience:
For the East Asian audience, the study advocates for mandatory pre-appointment training of prospective audit committee members and restrictive regulatory mechanisms to enhance audit committee members’ competence concerning the evaluation of external auditor’s independence and minimizing potential conflicts of interest for ensuring ethical audit practices and preserving audit quality of PIEs. The restrictive regulatory mechanisms should deter the governance of PIEs from engaging in activities which may be considered possible threats to external auditor independence and/or potential conflicts of interest which ultimately may compromise the external audit quality of PIEs.

Authors:
Darko Dachevski, University of South Africa, South Africa
Barry Ackers, University of South Africa, South Africa

About the Presenter(s)
Mr. Darko Dachevski is a Ph.D. candidate at the University of South Africa - College of Accounting Sciences in South Africa. His scientific field of interest is audit and assurance. He comes from North Macedonia.

Connect on Linkedin
https://www.linkedin.com/in/darko-dachevski-msc-ca-cacc-cfce-467640121/

Connect on ResearchGate
https://www.researchgate.net/profile/Darko-Dachevski/research

Additional website of interest
https://orcid.org/0000-0001-7942-4575

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