The Dilemma of Audit Quality Measuring in Archival Studies: Critiques and Suggestions for Iran’s Research Setting

To measure audit quality as a mental concept, different proxies have been implemented by archival research in auditing. Each one of these proxies measures different dimensions of audit quality concept and suffered from more to less errors. The present study focuses on the dilemma of audit quality measuring in Iran. To large extent, audit quality proxies dependent to research’s institutional setting. In Iran, demand for audit services is mainly based on legal enforcements and litigation risk is also weak. In addition to the discussion about audit environment in Iran and descriptive analyses in this relation, this study based on output- and input-based proxies of audit quality reviews, discusses, analysis and compares measurement errors of these proxies in Iran and international era. In light with the discussion, suggestions are presented to no use of some the proxies and to implement some alternative and localized measures. The analyses of this study also indicate that using several localized proxies with less measurement errors, paying attention to omitted correlated variables bias and using sophisticated research design to disentangle audit quality from financial reporting quality, are more likely to increase the credibility of the findings of archival studies in this area.