Entrance Requirements to the Audit Profession within the EU and Audit Quality

14 Pages Posted: 23 Oct 2018

Date Written: November 2018


This paper examines the relation between the stringency of entrance requirements to the audit profession within the EU and audit quality. Regulators and standard setters generally believe that such entrance requirements have beneficial effects by increasing audit quality. Whether this is indeed the case, however, is an empirical question given that regulations governing the entry to the audit profession are not the product of competitive market forces. We argue that a higher educational degree and longer traineeship period will result in higher audit quality. We also hypothesize that a professional oath will be positively associated with audit quality. Based on a sample of 3,782 firms from 20 different EU member states, we assess the relation between these requirements and abnormal working capital accruals. Our findings indicate that the requirement of a master's degree compared with a bachelor's degree is significantly associated with better accruals quality of audited financial statements. Second, we find that abnormal working capital accruals are lower in countries that require a traineeship period of at least 3 years. Finally, we find mixed evidence for the effect of a professional oath as part of the entrance requirements on audit quality.

Keywords: Audit quality, education/training, professionalism

Suggested Citation

Van Linden, Christophe and Hardies, Kris, Entrance Requirements to the Audit Profession within the EU and Audit Quality (November 2018). International Journal of Auditing, Vol. 22, Issue 3, pp. 360-373, 2018, Available at SSRN: https://ssrn.com/abstract=3271228 or http://dx.doi.org/10.1111/ijau.12127

Christophe Van Linden (Contact Author)

Illinois State University ( email )

United States

Kris Hardies

University of Antwerp ( email )

Department of Accounting and Finance
Pleinlaan 13
Antwerp, 2000

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
PlumX Metrics