This study aimed to define a public audit and discuss the roles of an internal audit to improve the audit quality of public institutions and carry out reliable audit activities. It also empirically analyzed the relationship between audit components(characteristics) which might influence a public audit, and audit quality. The specific process of this study is as follows: first, a discussion was had about the differences between a public and a private audit, and the roles, functions, and importance of an internal audit; second, the framework of audit components influencing the whole process of an audit based on audit components(characteristics) was presented to discuss the relationship between audit components and audit quality. Moreover, previous studies were organized in relation to the concept and substitutes of audit quality; third, an empirical study was carried out on how audit components influenced audit quality according to the framework of audit characteristics, suitable for the situation in the public sector; lastly, discussions were had about determinants necessary to improve audit components(characteristics) and audit quality of Korean public institutions through in-depth interviews with experts based on the results of this empirical study. In addition, a careful review was made related to the way to overcome the limits of generalization in an empirical study, and audit quality and components of public institutions through various opinions.
Audit quality in the public sector, which had not academically been conceptualized in a single sense, was defined as follows: Audit quality can be achieved when the procedures and results of an audit carried out based on accuracy, timeliness, and performability come up to enforcement criteria, and actually work as a mechanism of change to achieve the goals, missions, and values of the organization.
On the basis of the conceptualization audit quality, this study examined the casual relationship between audit components such as independence, specialty, the audit system, and audit values, and audit quality. It was considered that there were differences in the audit system between public institutions(public enterprises and quasi-government institutions) which was subject to analysis, and other public sectors (central and local government, and others) because 「ACT ON THE MANAGEMENT OF PUBLIC INSTITUTIONS」 and 「COMMERCIAL ACT」 applied to public institutions. As a result of a quantitative analysis, the significance of audit components depended on the indicator which became audit quality. When audit quality indicators(discretionary accruals, composite audit performance indicators, and were internally influenced, and internal integrity) independence and incentives were significantly shown. On the other hand, when they(comprehensive and external integrity) were externally influenced, auditors'' accounting expertise and incentives appeared as significant results.
Like in the quantitative analysis mentioned above, audit independence and expertise were considered important in an qualitative analysis. It was required to have the internal system or standards necessary to maintain the independence of the standing audit system and audit activities to improve audit independence. It was also shown that the will of the head of a public institution, who supported audit independence, was very important. As for an area of expertise, it was necessary to prepare and provide a variety of training programs for audit staffs. There was a discussion about the importance of the environment in which people with audit expertise could carried out audit activities through the appointment of experts except for rotating employees. In particular, it was pointed out that a controversy over a high-handed top-down appointment practice was mainly caused by the unclear roles of an audit(auditors). It was suggested that a problem about a high-handed top-down appointment practice would be viewed a little objectively and audit(auditor) expertise would also clearly be defined if the roles of an audit(auditor) should properly defined in Korean public institutions.
As a result of this study, it was identified that the components (characteristics) of the internal audit agency exercise a positive effect on audit quality. Therefore, it would be required to clearly state and practically realize the audit system of public institutions and quasi-government institutions. It was assumed that the systematic establishment of the internal audit operations in public institutions would have a positive effect on the efficient work performance and results of public institutions.