This study investigated the determinants of audit quality in cement and ceramic companies in Bangladesh. Correlation analysis found medium positive relationships between audit quality and institutional ownership and audit fees. Medium negative relationships were found for audit quality and directors' ownership. Regression analysis found audit fees and institutional ownership had statistically significant positive relationships with audit quality, while directors' ownership had a statistically significant negative relationship. Recommendations included increasing institutional ownership and audit rotation to improve audit quality.

1. Determinants of
Audit Quality

2. Introducti
on
Investors consider that audits
are of high quality if the
financial statements are free of
material misstatements and if
auditors give a warning signal
if a company is in financial

3. Introducti
on
Audit quality is a function
of an auditor’s perceived
competence and
independence.

4. Introducti
on
Definitions of audit quality implies that:
(1) Auditors discover material
misstatements in the financial statements
(auditor competence); and
(2) That these misstatements are reported
to the relevant parties (auditor
independence).

5. The purpose of this study is to
investigate the determinants of
audit quality in corporations
working in cement and ceramic
sectors in Bangladesh.
Introducti
on

6. Company
Overview
Industry: cement and ceramics
Key Points:
1. Publicly Traded
2. Institutional or Family Ownership
3. Manufacturer and distributor

7. Methodology
Audit
Tenure
Audit
Rotation
Directors’
Ownership
Market
Value
Rate of
Return of
the
Company
Family
Ownership
Audit
Fees
Audit
Quality
Mean
Value
Regression
Analysis
Correlation
Analysis

8. Literature Review
• Article of “Determinants of Audit Quality on Nigeria Stock Exchange” -
•“Audit fees, audit tenure and audit firm size have a positive and statistically significant relationship with
audit quality. The auditor-client relationship should not exceed 3 years, because the auditor may develop
close relationship with the client and become more likely to act in favor of management, resulting in
reduced independence and audit quality.”
• Journal of “Determinants of Audit Quality of Indonesian companies” -
•“Audit firm size, board independence and ownership structure were found to be positively related to audit
quality; however, only board independence exhibited a significant relationship with audit quality. Audit
tenure exhibited a negative relationship with audit quality which was also not significant.”
• Article of “Audit fees, Auditor choice and Stakeholder influence on business” -
•“Sometime it may be an indication of higher audit quality .It refers that a higher fee generally means
higher audit quality, either through greater audit efforts or through higher billing rates charged by the
auditors due to their greater expertise and reputation.”

9. Findings & analysis
Correlation &
Regression
Correlation
• r>0, means positive relation.
• r<0, means negative relation.
• r=0, means no relation

10. Correlation
• Audit quality and Institutional
Ownership have a medium positive
relationship between them as they
have r = +0.40.
• Between Audit quality and family
ownership the relation is very weak
but negative which is only r = -0.21.
• Between Audit quality and

11. Correlation
• Between audit quality and directors
ownership it has a medium negative
relationship. Which is r = -0.32.
• Between audit quality and big 4 it has
a medium positive relationship which
is r = 0.33.
• Between audit Quality and audit

12. Correlation
• Audit quality and tenure has weak but
negative relation scoring r = -0.23
• Lastly, Audit quality and audit fees has
strong positive relationship which is, r =
0.51.

13. Regression
• If the p-value >= 0.5, there is strong
relation. If p-value or significant F <=
.05 then the relation is statically
significant, and if p-value or
significant F <=.001 then the relation
isn’t statically significant.

14. Regression
R 0.348732
R square 0.121614
Adjusted R Square 0.147323
Standard Error 0.409399
P-value/Significant F 0.090289
t-stat 1.68

15. Regression
Audit Quality & Audit fees
• Here, the significant F is greater than
0.001, so it is statically significant but in a
negligible amount. Significant F =
0.004168489
Audit quality and Audit tenure
• Here, the Significant F is more than 0.05,

16. Regression
Audit quality & Audit rotation
• Here, the Significant F is less than 0.001,
so, the. relation isn’t statically significant.
Significant F=0.00002143
Audit Quality & Big 4
• Here, Significant F is more than 0.05. So,
the relation is strongly statically significant.

17. Regression
Audit Quality & Director's Ownership
• Here, significant F is more than 0.05, so it
has a strong statically significant
relationship. Significant F=0.080151749
Audit quality & Independent Directors
• Here, the Significant F, is more than 0.001,
so, it has a statically significant relation.

18. Regression
Audit quality & Family ownership
• Here, the Significant F is more than 0.05, so,
it has a strong statically significant
relationship with the audit quality. Significant
F=0.301313569
• Fig: Audit Quality & Inst. Ownership
• Here, the significant F is less than 0.05 but
more than 0.001, so, it has a statically

19. Recommendation
1.Intuition Ownership must be increased to
level up audit quality.
2.According to country’s culture family
ownership is high, which must be reduced,
then a good image will be seen in audit
quality.
3.If possible companies should hire the Big 4,
for auditing.

20. Recommendation
1.Every company should increase audit rotation,
specially: Shinepukur Ceramics.
2.Shinpukur Ceramics must decrease their director’s
ownership, since it’s too high and nt good for audit
quality.
3.Standard Ceramics & Shinepukur Ceramics
ROE condition is not good, they must take enough
initiative to change it since both of them are very
old company in our country.