Revisionskvalitet ved revisors anvendelse af Service Delivery Center i udførelsen af revisionsopgaver: Et speciale med fokus på revisionskvalitetens forudsætninger ved anvendelse af Service Delivery Center i revisionens udførelse

Feline Miller & Kasper Kryger Thuesen

Student thesis: Master thesis


Geographically distributed audit arrangements in terms of offshoring are becoming increasingly prevalent in audit practice. Internationally, the Big 4 accounting firms offshore audit tasks to inhouse service delivery centers located in geographically distanced areas, such as South America, Eastern Europe and countries like India. While benefits of offshoring audit services may include cost savings, there is also an important question of audit quality associated with moving domestic work to foreign locations and associated service delivery centers.
The Financial Reporting Council (FRC) and other oversight boards have expressed their concern on applying service delivery centers. The aim of this thesis is thus to explore and evaluate how geographically distributing certain tasks within audit work will affect audit quality.
This thesis includes perspectives on how leading audit firms in Denmark have established, implemented and applied service delivery centers within audit and assurance and how this affects audit quality with regards to each engagement level. Furthermore, the thesis discuss the different setups of service delivery centers as well as the contextual frame of audit work and quality when performed through the use of these service delivery centers.
The analysis is based on empirical research from interviews with the Danish National Professional Practice Directors in leading audit firms combined with reflections from oversight boards related to relevant regulation subject to auditing.
The thesis reveals that geographically distributed audit work is likely to be very different from work performed in more traditional arrangements and therefore the consideration for audit quality within the audit firm and engagement must me revised.
The thesis finds that within the audit firms there is great variance between the extend and application of service delivery centers. There is a broad understanding that standardized, repetitive design of audit work enhances audit quality, which is often a prerequisite for operating with geographically distributed audit work. The service delivery center arrangement can substantiate and ease the process of standardization. The thesis further concludes that audit quality is measured as an equilibrium between efficiency and level of detail of audit work. This is envisioned through the importance of balancing the level of instructions and review particularly due to the risk of information asymmetry resulted in geographical distribution of audit work as well as audit team.
Additionally, the thesis concludes that the changed environment for performing audit work as a result of service delivery centers must be addressed by the audit firm and reflected in internal policies in order to follow the International Standard on Quality Control. This applies to establish policies and procedures designed to promote an internal culture recognizing that quality is essential in performing audit work, which must be recognized from both the client-facing team and the offshore team. Offshore arrangements can enhance audit quality by ensuring that tasks are much more coherently and cohesively addressed due to consistency of execution.
Finally, the thesis conclude that audit quality will not be affected negatively by the use of service delivery centers. But the risks identified have to be mitigated by a prober review performed by the client-facing team reviewing the prepared audit work thus in order with current standards and legal acts. Moreover, audit quality can be enhanced by standardized and repetitive workflows.
In perspective, further analysis could adequately investigate how current macroeconomic trends might affect the extent of offshoring audit work.

EducationsMSc in Auditing, (Graduate Programme) Final Thesis
Publication date2020
Number of pages127