Hussein and Hanefah [7] and Hosseinniakani et al. [8] hold that contemporary business and service entities are attributing greater and greater importance to audit quality assurance because of the various useful purposes that it serves, in terms of promoting and sustaining stakeholders’ and public trust and confidence in financial statements, thus urging auditors or audit firms to produce audit reports of the highest quality [9] .

Jin et al. [10] claimed that stakeholders’ and, indeed, publics’ trust and confidence had been thoroughly eroded following the Enron and WorldCom scams, leading to the collapse of these two giants, at the near end of the last century. Realizing the urgent need for remedying to such loss of trust and confidence, the IAASB pressed for audit professionals’ rigorous adherence to audit quality assurance and controlling mechanisms to ensure compliance with truly international standards, as an effective deterrent to fraud and other malpractices [4] .

With audit quality contributing as it does to enhancing the reliability of audit reports or financial statements, the need for redoubling efforts in such direction is increasingly being acknowledged as an imperative [1] . The contributions can be measured mainly in terms of highly beneficial influences with respect to a firm’s image and reputation, greater assurance and confidence in audited financial statements, and benefits for public interests. It is stated that this significantly contributes to ensuring success in a more sustainable manner.

With regard to firm’s reputation, Choi et al. [3] stated that once a firm has built its reputation through consistently ensuring audits of the highest quality, it will stand to gain from enhanced credibility levels. The direct benefit of such added creditworthiness is that decision-makers and investors will be more likely to value the auditor’s findings, conclusions or recommendations and more disposed to implement same. Thus, the need for ensuring audit quality to the highest international standards can stimulate domestic as well as foreign direct investment (FDI) flows.

It is DeAngelo’s [11] view that given that audit firms’ findings or recommendations are bound to be challenged at one time or other, particularly in a context characterised by fraud and other financial malpractices (Enron, Parmalat or the Kaupthing Bank or the BAI scam, within our own shores, are but a few eloquent examples), no audit professional should overlook the authentic value of audit quality. In fact, there are so many constituencies ever ready to challenge the soundness of an audit report. Even the minutest error revealed, or a finding disproved, brings water to the mill of contestants, thereby significantly damaging diverse publics’ as well as stakeholders’ trust and confidence [12] .

According to Geiger and Rama [13] , any effort to ensure that public interest is protected while the needs of users of audit works are truly met, must be founded on authentically functioning audit quality mechanisms. It is all a matter of responding to healthy standards of accountability required of state or parastatal bodies. When audit reports or findings are free from misrepresentations, distortions, or bias, it is more than likely that thoroughly-documented audit analyses will ensure stakeholders’ or public adhesion or approval, leading in turn to enhanced levels of trust, confidence and assurance [14] . These writers claimed that, in the process, audit quality is sure to demonstrate that principles of good governance are truly functioning in the best interest of a country and its people.

It is claimed that today the pressures for ensuring improved assessment of risk are increasing considerably across the world (Epstein and Buhovac, 2006). This trend originates from the necessity to counter the various breaches of established principles which have tended to become rather common these days, thus adversely impacting corporate governance as much as a country’s good governance levels.

Studies on audit quality are concentrated in developed economies and few studies have conducted in developing economies. In addition such studies are scarce in small island economies such as Mauritius. There is a gap in the literature of audit quality with regards to developing economies and small island economies. This study attempts to reduce this gap.

It is now appropriate to shift attention to those factors that are observed to have an impact on audit quality. These, according to Turley and Willekens [1] , include: Audit fees, Audit Firm Size, Audit Tenure, Audit Firm’s Reputation, Financial Statement-Restatement, Audit Industry Expertise, Auditors’ Independence, Non-Audit Services, and Audit Rotation.

It is claimed by O'Sullivan and Diacon [15] that audit fees tend to be mirrored not only by complexity, audit hours taken, or the risk factor, but also by the kind of specialized service required. Inevitably, then, audit quality to ensure that financial statements are free from misrepresentations, distortions, or bias, is impacted by audit fees [16] [17] .

Larger firms that offer auditing services adopting more elaborate audit procedures, it is only logical that the quality of audit work is going to be enhanced. Also, as perceived by Kilgore [18] , audit firm size is a common surrogate for creating audit quality. Otherwise, as upheld by DeAngelo [11] , when firm size is large, concern about not losing client companies means that the firm in question will make sure that audit quality is sustained. This view is also shared by Hussein & Hanefah [7] . They found that large audit firms find themselves in a situation where due attention must be given to professional competence, high auditor’s qualification, and highly selective recruitment of talented as well as knowledgeable supporting staff.

It has been demonstrated by some studies that knowledge ability level between client and audit firm is influenced by audit tenure. According to Crabtree [19] , when audit tenure augments it is more likely that the auditors’ knowledge about the client will increase and vice-versa. Studies have established that audit firm-client relationship grows stronger when the audit tenure is longer [14] . This condition has also been found to be characterized by more frequent audit reporting failures during the initial period of the long tenure, with the situation improving in the long run, as audit quality is enhanced.

According to Susanty and Gunawan [20] , the performance of audit firms and auditors concerned with sustaining their reputation, can also be viewed as a catalyst towards a new direction where individual performance becomes the competence indicator of auditors. No wonder, then, that emerging auditors are ever concerned about the growing importance of achieving competitive advantage through sustaining audit quality efforts, consistently. Looking into the linkages between firm’s reputation and quality of audit work, Aronmwan et al. [21] revealed that such relationship is definitely positive, with audit firm’s reputation having a welcome impact of on the second variable.

Liu et al. [22] are of the view that frequent financial restatements do mirror audit failure. They found that when faulty financial statements had to be restated, the expertise of the audit firm may be questioned, thus impairing auditor’s credibility and creditworthiness, impacting audit quality in turn. Likewise, when investors trust and confidence in a firm’s credibility negative are lost, adverse perceptions can develop and lead to negatively affected performance ahead [23] . They found that high quality audit increases as the number of accounting restatements decreases.

Reichelt and Wang [24] stressed how importantly auditing expertise in terms of technical competence raised to higher levels may go hand in hand with technical information expertly handled to effectively and efficiently reveal errors of misstatement in financial reporting. Industry-specific expertise is increasingly being recognized as a strong contributor to audit quality enhancement, with auditors adopting and expressing more conservative opinions in their reports.

Referred to as objective and hence, impartial judicial approaches to ascertain the production of honest and fair opinions on the financial position of entities, with an obligation to meet creditors’ and other interested constituencies’ demands for audited financial statements free from errors and omissions, audit independence is purported to be vitally important for ascertaining audit quality. Gatekeeping public securities in contemporary marketplaces therefore require the emergence of authentic auditing, characterized by a good measure of independent opinions expressed by firms [25] .

It is claimed that by providing non-audit services, audit firms compromise on the quality of their auditing standards or opinions, as stressed by Alleyne et al. [26] as well as Francis [27] , a couple of years earlier. When non-audit services are offered auditor’s impartiality or independence are at risk, thereby causing stakeholders or investors to be suspicious of financial statements and auditing reports [28] .

The conclusions of Dopuch et al. [29] imply that the tendency of resorting to voluntary retention of auditors by manager-subjects is more pronounced under Regimes 1 and 2, for multi-periods, with the risk of audit quality and independence being eroded, becoming more likely to happen, as audit tenure stretches to longer periods. Retention also implies that through manager-subjects and auditor-subjects developing deeper relationships, higher investment levels are initiated by managers.

With the use of the Varimax method, a factor analysis was conducted to check whether different factors rearranged under the similar constructs. In order to assess the strength of the different factors, the Kaiser-Meyer-Olkin (KMO) Measure of Sampling Adequacy and the Barlett’s test were carried out before the analysis. KMO was 0.590 which was higher than the required minimum of 0.50 and the significance value for the Barlett’s test was 0.000. Consequently factor analysis was conducted since it was acceptable and useful. Table 1 shows that four components having Eigenvalues above 1 were extracted and they explained a total variance of 60.795%.

To better understand the results a factor rotation was conducted as shown in Table 2.

The first component was named as Reliability. This factor with an eigenvalue of 2.16 explained 17.997% of variance. The second factor was named Firm Performance with an eigenvalue of 1.827 and it explained 15.222% of variance. The third factor was named Assurance with an eigenvalue of 1.507 and it explained 12.558% of variance. The last component was named Reputation with an eigenvalue of 1.151 and it explained 9.558% of variance.

The mean score of Reliability is 4.113 which is higher than 4, it can be deduced that on average the respondents agree that audit quality leads to reliability of financial statements. The statement “High audit quality enables a firm to confidently confront criticism of its audited report” has a mean score of 3.950. This is congruent with the findings of De Angelo [11] and Duff [12] . The statement “Audit quality ensures a true and fair view of the firm financial position and

performance”, has a mean score of 4.144. This confirms the findings of Francis [27] and De Fond & Zhang [6] . It is observed that the findings of Aronmwan [21] and Susanty & Gunawan [20] appear to be confirmed through the statements “High quality financial statements increase a firm’s performance”. This statement features a mean score of 4.244.

The mean score of Firm Performance was 4.055 which is higher than 4. It can be deduced that on average respondents agree that audit quality ensures greater responsiveness of financial statements. The statement “Audit quality is an important contributor to successful performance” has a mean score of 4.005. This is tune with the findings of Geiger and Raghunandan [14] as well as Geiger and Rama [13] . The statement “High quality audit ensures due diligence in a firm’s policy-making and decision-making”, has a mean score of 4.305. This is in agreement with the IAASB [4] guidelines. The statement “Audit quality helps to attract foreign direct investment” has a mean score of 3.855. This is in line with the findings of Lennox [30] . The Cronbach’s alpha for component Assurance and Reputation were 0.508 and 0.395 respectively. Since the Cronbach’s alpha for both component was below 0.6, their composite scores were not calculated.

With the use of the Varimax method, a factor analysis was conducted to check whether different factors rearranged under the similar constructs. In order to assess the strength of the different factors, the Kaiser-Meyer-Olkin (KMO) Measure of Sampling Adequacy and the Barlett’s test were carried out before the analysis. KMO was 0.514 which was higher than the required minimum of 0.50 and the significance value for the Barlett’s test was 0.000. Consequently factor analysis was conducted since it was acceptable and useful. Table 3 shows that five components having Eigenvalues above 1 were extracted and they explained a total variance of 65.363%.

To better understand the results a factor rotation was conducted as shown in Table 4.

The first component was named as Expertise and Independence. This factor with an eigenvalue of 2.09 explained 16.823% of variance. The second factor was named Tenure and Restatements with an eigenvalue of 1.768 and it explained 14.736% of variance. The third factor was named Image with an eigenvalue of 1.412 and it explained 11.769% of variance. The fourth component was named Size with an eigenvalue of 1.395 and it explained 11.629% of variance. The last component was named ‘Non-Audit Services and Rotation’ with an eigenvalue of 1.249 and it explained 10.407% of variance.

The mean score of ‘Expertise and Independence’ (Table 5) was 4.17 which is higher than 4. It may be inferred that on average respondents agree that expertise and independence of audit firm enhances audit quality. This is consistent with Meyer [31] and Reichelt and Wang [24] who found that audit firms having relevant industry expertise produce high quality of auditing.

The mean score of tenure and restatements (Table 6) is 4.0722 which implies that on average respondents agree that long auditor tenure enhances audit quality and financial restatements negatively impact audit quality.

The mean score of Brand Image (Table 7) is 3.319. It may be inferred that on average respondents are neutral regarding the effect of the brand image of an audit firm on audit quality.

The Cronbach’s alpha for component ‘Size and Credit Worthiness’ and ‘Rotation of Audit and Non-Audit Services’ were 0.523 and 0.472 respectively. Since the Cronbach’s alpha for both component was below 0.6, their composite scores were not calculated.

It can be observed from the above table that there is no significant difference among male and female concerning Reliability. In fact the mean score for male is 4.07 and that of female is 4.17. It implies that both male and female agree that audit quality enhances reliability of financial statements. This finding is congruent with those of Susanty & Gunawan [20] and Duff [12] .

However there is a significant difference in the views of male and female concerning financial performance. The mean score for male is 3.94 and that of female is 4.19. It may be inferred that female are more agreeable that audit quality enhances firm performance. There is no significant difference among respondents with different experience level concerning Reliability. On average the respondents agreed that audit quality enhances reliability of financial statements with a mean score of 4.11. In addition there is no significant difference among respondents with different experience level with regards to firm performance. On average the respondents agreed that audit quality can enhance firm performance with a mean score of 4.06.

There is no significant difference among male and female concerning expertise and independence. Both agree that expertise and independence of an audit firm enhances the quality of its audit. In fact the mean score of male and female is 4.19 and 4.14 respectively. This is in line with the findings of Hammersley [2] and Reichelt and Wang [24] .

However there is a significant difference in the views of male and female concerning Tenure and Restatements. The mean score of male and female is 3.96 and 4.20 respectively. Female are more than agreeable than male that Long auditor tenure leads to high audit quality and that Financial restatements of faulty statements negatively impact audit quality. With regards to Image, there is no significant difference among male and female. Both male and female agree are neutral regarding the impact of image concern for both the audit firm and auditee on audit quality delivery by audit firm.

There is no significant difference among respondents with different experience level concerning Expertise and Independence. With a mean score of 4.17, respondents on average agreed that expertise and independence of an audit firm enhances the quality of its audit. In addition there is no significant difference among respondents with different experience level concerning Tenure and Restatements. With a mean score of 4.07, respondents on average agreed that long auditor tenure leads to high audit quality and that financial restatements of faulty statements negatively impact audit quality.

Furthermore there is no significant difference among respondents with different experience level Image. With a mean score of 3.31, respondents on average are neutral regarding the impact of image concern for both the audit firm and auditee on audit quality delivery by audit firm.