Client industry audit expertise: Towards a better understanding

Purpose ? The purpose of this paper is to consider the supply of audit firm industry specialisation in the market for statutory audits of publicly traded companies in Australia. The purpose of this study is to seek to gain a better understanding of the dynamics within the market for industry specialist audit services. Design/methodology/approach ? A structured interview process is used to investigate certain issues with the suppliers of industry specialist audit services (in this case all the then Big 5). Findings ? This paper found that industry specialisation involves the Big 5 audit firms developing a specialised knowledge of what clients do within any given industry and the issues and audit risks they face. The Big 5 have industry ?focus? groups that are responsible for providing ?leading edge? practices to their clients. According to many of the auditor interview respondents, the large number of Australian Stock Exchange (ASX) classifications has meant that audit firms have sought a more manageable means of partitioning their practices into different industry focus groups. The ASX classifications were described by some of those interviewed as being irrelevant. This raises questions regarding prior auditor industry specialisation research that has relied on these classifications.