For decades, audit quality has been placed on the regulatory agenda in many countries such as The U.S., UK, and Australia, etc. In particular, Australias Federal Treasury has released a discussion paper named Audit Quality in Australia, a Strategic Review. This document has once again stressed the importance of the audit function in financial reporting and its efficient functioning in capital markets and its impact on cost of capital. In reviewing audit quality, the discussion paper examined various drivers of audit quality: the regulatory framework; audit review processes; audit firm arrangements and processes; the reliability and usefulness of audit reporting; and other factors outside the control of auditors that affect audit quality.

Outline and discuss how auditors independence might impact audit quality