Audit quality contributes to the overall quality of financial reporting and auditing standards now require auditors to discuss the qualitative aspects of the entity’s reporting practices with those charged with governance. The main purpose of this study is to examine the quality of audit and its determinant factors in the case of ANRS OAG audit reports. The research applies a mixed research approach with an explanatory and descriptive research design. The target population for the research is those employees who are working in the Office of Auditor General and government offices audited by OAG. The study applies purposive and stratified sampling technique to select samples of the study under consideration. The data was collected based on primary data type through interview, focus-group discussion and questionnaire and from secondary data. A total of 80 auditors, 147 auditees, 3 FGD, 10 audit files were used for the data collection and data analysis. For data analysis descriptive statistical method, correlation analysis and regression analysis were applied in this research. In compliance to audit standards OAG in its existence, the appointment of the Head and the necessary degree of independence is spelled out in the regional constitution. Auditors’ technical competence, independence, audit reporting quality and auditors’ responsiveness to clients’ needs are the major contributing factors for perceived audit quality. Efficiency of top management, supervision, the will of politicians/executives, oversight of OAG, autonomy, reward mechanism, and turnover of staffs are perceived as the causes that affect the quality of audit. From this study we have found that the quality of audit is compromised and at least it is deteriorating through time when it is compared to the previous years’ results. The office’s audit quality has been in a declining trend basically due to lack of auditors’ commitment, skill and experience of auditors, lack of frequent supervision, the existence of high senior auditors’ turnover, and the absence of a well-established quality assurance system as a department. To conclude, the quality of audit is compromised either through the customization process of AFROSAI-E standard or lack of proper supervision and negligence of auditors in following the customized RAM standard when we compare audit reports with audit standards. According to the findings of this research OAG is expected to establish quality assurance department, conduct continuous and regular training for auditors and create smooth working environment. There should be strong oversight body that closely follows the activities of OAG and additional resources and autonomy has to be granted for OAG in order to increase the coverage of auditing for the regional states revenues, expenditures and assets/liabilities.

This study examines the external audit effectiveness of the Office of Auditor General in the Amhara region. Using mixed methods approach, the overall results indicated that the commonly observed audit findings of the region for more than a decade include cash deficit, outstanding receivable and payables, uncollected revenues, abuse of payments, non-compliance with procurement rules and regulations, payment without supporting evidences, improper construction expenditures, and misuse of property. The major reasons for the prevalence of audit findings are lack of professional competency, high staff turnover, poor documentation or record keeping by auditees, poor communication or information exchange, absence of accountability, ignorance and deliberate fraud, and lack of responsibility and enforcement. The study results also confirmed that the external audit has not been effective to reinforce the public fund accountability in the region mainly due to absence of accountability and failure to act by oversight bodies (legislative, executive and judiciary bodies) and auditee’s management based on audit recommendations. The audited institutions do not take timely corrective measures based on recommendations of audit findings mainly due to lack of attention by oversight bodies, absence of proper action on perpetrators at all level of management, living with fear rather than questioning at all levels as well as poor internal control system of auditees