The impact of audit quality factors on auditor retention: Perceptions of audit clients in Ho Chi Minh city

ors (average value is positive). This implies that the higher value of the clients’ perception on service quality, the more satisfied they are, resulting in loyal clients who want to continue using audit services from current firms. The responsiveness factor has the most significant difference in the two groups of clients (Sig. = 0.00 <0.05). The retainer’s response a significantly high mean of 1.25. However, the customer intending to rotate auditors evaluate this factor at a low level of -0.85, indicating that clients who have intention to change audit firm do not have a good estimation of auditors’ ability to meet their service requirements. The mean difference is -2.10, which is highest in all factors. Following this, the two factors of Reputation and Independence also differ significantly, with Sig value = 0 in each group, mean values of -1.56 and -1.31 respectively. However, regarding to independence factor, the client rotators group give a neutral valuation of this factor with the mean value = 0. The mean value is high because the group of retainers’ mean value is 1.31). Additionally, Capability and Assurance also differs between the two groups, but the mean difference is slightly lower (-1.11 and -0.79). The Expertise factor does not illustrate a significant difference of 95% confidence interval, with sig value. = 0.3> 0.05. 4.2.4. Further discussions Overall, the results give a similarity in the positive impact of quality factors on the ability of clients to retain audit services of current audit firms. This is in line with some other service quality research in Vietnam such as Phan Chi Anh et al. (2016). Comparing to Butcher et al. (2012) in New South Wales - Australia, audit quality factors also have a positive effect on clients’ intention of continuing appoint current auditing companies. Or in other words, if auditor want to maintain their audit clients, they should improve the quality aspects of their services. This result is correspondingly with Ismail et al. (2006). In terms of comparison of perceived quality of service between two client groups, referring to the study by Butcher et al. (2012) in Australia, we can state comments as follows: - This result is consistent with the results of Butcher et al. (2012) that the group having intention to continue use auditors perceive higher audit quality than the group of rotators. - Outputs of these studies show that the difference between two groups due to differences in the valu- ation of audit service quality in terms of service response (Responsiveness) and professional (Expertise) 422 HỘI THẢO KHOA HỌC QUỐC TẾ KHỞI NGHIỆP ĐỔI MỚI SÁNG TẠO QUỐC GIA aspects. This means that the auditors and audit firm provide services which tailored to the needs of each client at a high level of expertise. In addition, the study in Vietnam showed a clear difference in the reputa- tion factors, while two groups of Australian clients in Butcher (2012) study differed significantly in terms of performance service (Capability). In other words, in order to maintain the customer, auditors and audit firms should pay attention first to the quality aspects that the customer wants to be served better in Ho Chi Minh City such as reputation and independence. 5. CONCLUSIONS, RECOMMENDATIONS AND LIMITATIONS 5.1. Conclusions According to service quality models and the impact of service quality on customer loyalty, this paper proposes a suitable study model to explore factors of audit service quality in HCMC as well as the impact of these quality factors on clients’ intention to retain incumbent audit firms in the next financial year. The model and scale of the study have also been adjusted by survey data. This research found seven quality factors of the audit, and the positive influence of these factors on clients’ intention of audit firm retention. There are seven factors discovered are reputation, capability, assurance, independence, expertise, experience and responsiveness. This implies that when clients perceive the higher quality of audit service, the ability of retention of audit firms will increase. In seven identified audit quality service factors, there are six factors having difference in the perception of service quality between two groups of clients namely rotators and retainers. Three of the six factors have a significantly in audit service quality perceived between two groups are Responsiveness, Reputation and Independence. These are the quality aspects that auditors and audit firms should improve to retain their clients. 5.2. Recommendations A few considerable recommendations occur from these paper results. The first suggestion is that academic researches should focus more on the perceptual aspects of auditing services from clients’ perception besides the two groups of initial audit quality factors including technical competence and independence. In addition, the main reasons for companies wanting to change auditors are that clients have not been satisfied with the quality of service in terms of some aspects such as Responsiveness, Reputation and Independence so that auditors should prioritize the improvement of these service quality aspects to satisfy and retain existing clients. 5.3. Limitations and further studies The shortcomings of this study are the limitation in sample size and study area. Further studies can survey a larger company quantity in other economic centres such as Ha Noi, Da Nang, Binh Duong, Hai Phong or over Vietnam to obtain more comprehensive research results. 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The Free Press, New York, NY. 424 HỘI THẢO KHOA HỌC QUỐC TẾ KHỞI NGHIỆP ĐỔI MỚI SÁNG TẠO QUỐC GIA Appendix 1. Audit service quality attributes adjusted from Duff (2009) and Butcher (2012) Subcategory Code No Survey attribute Reputation REP_1 1 The audit firm tends to have decentralized offices rather than centralized offices REP_2 2 The overall reputation of the audit firm is positive REP_3 3 The audit firm has rarely been found negligent in lawsuits brought against it (alleging inadequate audit performance) REP_4 4 The size of the audit firm in terms of its total revenue and number of auditors is much larger than the average size in the region Capability CAP_1 5 The audit firm develops stringent time budgets for each audit area and expects its people to meet them CAP_2 6 The audit firm conducts a thorough study of the client’s system of internal control CAP_3 7 The audit team members as a group always exercised due care throughout the engagement CAP_4 8 The personnel on the engagement below manager level have passed the professional bodies’ exams CAP_5 9 The audit firm reports internal control deficiencies and the auditors’ recommendations on internal control are useful CAP_6 10 The audit team members as a group have an adequate understanding of the operations of the council CAP_7 11 The audit team members conducted the audit fieldwork in an appropriate manner CAP_8 12 The audit firm makes extensive use of statistical techniques in conducting the audit CAP_9 13 The number of hours spent by the audit team to complete the audit (from the beginning of fieldwork to the audit report date) is commensurate with a quality audit. Assurance ASR_1 14 The audit firm actively encourages staff members to take courses and attend seminars in fields where the firm has major clients ASR_2 15 The audit firm has a high audit staff turnover rate ASR_3 16 Audit team members are rotated off the audit periodically ASR_4 17 Before accepting a new client, the CPA firm conducts a pre- engagement investigation and goes through risk control procedures including the conduct of a background search on senior management of the prospective client ASR_5 18 The work performed by inexperienced members of the audit team is supervised by the audit team manager ASR_6 19 The audit firm has strict guidelines on the procedures that must be completed before signing the audit report ASR_7 20 The audit report and work papers receive a second partner review Independence IND_1 21 The audit firm is skillful in devising acceptable accounting treatments for transactions that generate results that council management wants IND_2 22 The audit firm’s attitude is one of a sceptic, not one of a client advocate IND_3 23 The audit staff assigned to the engagement have very high ethical standards IND_4 24 In all your dealings with the audit firm and individual audit team members, the audit firm and audit team members never engaged in any actions that would compromise its/their independence, either in fact or in appearance 425 INTERNATIONAL CONFERENCE STARTUP AND INNOVATION NATION Expertise EXP_1 25 The partner assigned to the audit engagement is very knowledgeable about the industry EXP_2 26 The auditors assigned to the engagement are very knowledgeable about accounting and auditing standards EXP_3 27 The audit manager and supervisor assigned to the engagement are very knowledgeable about the industry Experience EXPR_1 28 The audit firm has been performing the audit for at least 2–3 years EXPR_2 29 The audit engagement partner has been on the audit for at least 2–3 years EXPR_3 30 The audit manager has been on the audit for at least 2–3 years EXPR_4 31 The audit supervisor has been on the audit for at least 2–3 years Responsiveness RES_1 32 The audit firm is agreeable to completing the audit by a date the client has set RES_2 33 There is frequent communication between the audit team and the council’s audit committee RES_3 34 There is frequent communication between the audit team and council management RES_4 35 The audit firm keeps council management informed during the year about accounting and financial reporting developments that affect the council RES_5 36 The audit engagement partner and manager make frequent visits to the council during the conduct of the audit RES_6 37 The auditor adds value to the entity in terms of generating useful ideas for improvement RES_7 38 The external auditors co-operate with the internal auditors Note: highlighted attributes are removed after the first test of reliability coefficient