A Study on Factors of Quality-Control System and Audit Quality Using Bayesian Network

This study examines factors of quality-control system in accounting firms that influence the quality of auditing services. Many studies performed on the quality-control system in accounting firms exhibit two limitations. First, previous studies analyzed whether an accounting firm’s establishment of a quality-control system is closely related to the quality of its auditing service (Glover, Prawitt, & Taylor, 2009; Lennox & Pittman, 2010; DeFond & Lennox, 2011; Lee, 2011), but none of the studies present the cause-and-effect relationships between the factors of quality-control system in accounting firms, thus providing no implications for the managers. This paper, thus, is purposed to investigate the veiled causal relationships between factors that can distinguish between high and low auditing qualities in a statistically valid way and to get over the limitations of the antecedent studies. This study tries to get over the issues of the uniform assumption, that is a linear function between independent variables and dependent variable in multiple regression widely used in antecedent studies. It is demanded to analogize a causal relationship between factors of a quality-control system of accounting firms which have an impact on the quality of auditing services. Identifying the relationship would empower the accounting firms to improve the quality of their auditing services by informing the decision-makers of the accounting firms about the different factors that influence the quality of auditing services. This paper offers General Bayesian Network (GBN) and proposes Markov Blanket leaded from GBN.