The Determinants of Audit Quality in an Emerging Market: Evidence from Cambodian Auditors

Abstract

This study aims to evaluate the impact of auditors’ skepticism, competence, motivation, time budget pressure, and audit tenure on audit quality in Cambodia. It also examines the indirect effects of auditors’ skepticism, competence, and motivation on audit quality, mediated by time budget pressure. Six latent constructs, or unobserved variables—auditors’ skepticism, competence, motivation, time budget pressure, audit tenure, and audit quality—are developed in the Confirmatory Factor Analysis (CFA) using observed or manifest variables. The data are collected from 107 independent auditors in both local and international accounting firms in Cambodia. Path analysis within the Structural Equation Modeling (SEM) framework is utilized to evaluate the influence of these constructs on audit quality, with auditor experience designated as a control variable. The study found that auditor competence and tenure significantly enhance audit quality, while skepticism, motivation, and time budget pressure showed no direct effect. However, skepticism, competence, and motivation significantly influenced time budget pressure. Despite this, it did not impact audit quality and therefore does not serve as a mediating variable. These results indicate that, although certain auditor traits contribute to perceived time pressure, such pressure does not affect audit outcomes. Overall, the model highlights auditor competence and tenure as the most influential factors in achieving high audit quality, emphasizing their importance in regulatory and professional practices.