Regulatory Oversight and Audit Failures: A Study of Ghana’s Audit Quality Review Process
DOI:
https://doi.org/10.47941/jacc.4043Keywords:
Regulatory Oversight, Audit Failures, Audit Quality, Professional MisconductAbstract
Purpose: This study investigates the Ghanaian audit quality review process as both an institutional practice and a regulatory mechanism. Specifically, the study evaluates how oversight is operationalized, the extent to which it mitigates audit failures, and the institutional factors that shape its effectiveness.
Methods: This study uses exploratory qualitative research design, consistent with Logie and Maroun to examine the regulatory oversight and audit failures in Ghana’s audit quality review process implemented through Act 1058. Data was sourced from Audit Quality Review reports published by Institute Chartered Accountants-Ghana (ICAG) for 2023 and 2024.
Findings: Study reveals that the dual role of ICAG as both custodian and disciplinary authority raises concerns of soft regulatory capture, where enforcement may prioritize visible infractions over systemic quality failures. The findings underscore the need for a shift from rule-based inspections to risk-based, capacity-building oversight. The findings further suggest that resource constraints, the potential for institutional decoupling, and possible regulatory capture associated with ICAG’s dual role as professional body and regulator may limit enforcement effectiveness and hinder the development of a sustainable audit quality culture in Ghana.
Unique Contribution to Theory, Practice, and Policy: The study integrates institutional, legitimacy, and regulatory theories to explain the coexistence of improved formal compliance and persistent technical deficiencies in audit practice. It also provides evidence that highlights the need for risk-based reviews, stronger internal quality management systems, competency-based continuing professional development, and targeted technical support for audit firms. This study advocates greater autonomy and independence for audit quality monitoring, and a shift towards enforncement that evaluates the sufficiency of audit evidence, professional judgment, and actual audit performance rather than procedural compliance alone.
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