Determinants of Audit Quality in United Kingdom Banking Sector

Abstract

This study examines the determinants of audit quality in United Kingdom listed banks. The study employed secondary data sourced from the publicly available annual financial reports and audit inspection reports. The sample includes 40 companies listed on the London Stock Exchange, representing all banks covering 2020-2022. The study used a Random-Effects Model as baseline model and incorporates both POLS and quantile regressions for sensitivity analysis and robustness testing. The findings provide strong evidence that the presence of several large owners, the use of data analytics, and regular audit committee meetings are positively correlated with improved audit quality. The study emphasises the need for more investigation into assessing the proficiency of auditors and the particular elements of auditor independence that are particularly crucial in the UK setting. This study enhances the current knowledge by investigating a wider group of individuals involved and use sensitivity analysis to reinforce the results. These significant findings are relevant for policymakers, audit firms, and corporate governance structures that want to improve the
quality of audits and boost the credibility of financial reporting in the banking sector of the United Kingdom.