This research study explored the factors that influence audit quality from the perspective of audit firms in Malaysia. An auditors is expected to review the financial statements and assess the accuracy of the financial information provided by the company. In this study, external auditor is the party discussed rather than internal auditor. The study predicted that audit firm size, audit firm industry experience and audit firm independence to positively influence audit quality. Furthermore the study also expected that the level of audit quality among audit firms in Klang Valley is to be moderate. The selected sample of population for this study is the audit firms located in Klang Valley. This study adopted a quantitative approach via questionnaire to collect data which is later analysed using descriptive statistics, correlation and regression analysis. The findings of the study showed that the level of audit quality among audit firms in Klang Valley is high than expected. In addition, the audit firm industry experience has statistically positive association with audit quality. While the other factors such as audit firm size and audit firm independence have no association with audit quality. The result suggested that the audit firm industry experience is the most important factor to be considered in determining audit firm quality. There are three implications of this study. The first implication of this study can be viewed from the theoretical point whereby agency theory expects that audit firm with good industry experience would be able to monitors the management of company better. Thus this will reduce the agency problem that might occurs in the company and satisfy the concern of shareholders. The second implication is related with the internal audit policy, where the audit firms can enhance their audit quality by reviewing the current standards of reporting in Malaysia and reconsidering to adopt the International Auditing Guidelines (IAG), International Standards on Auditing (ISA) and International Auditing Practice Statements (IAPS). In addition, the human resource department of the audit firm should provide better training and development programme in order to enhance the individual auditor industry experience. The HR officer also should select an appropriate person with the right kind of criteria to be employed as the auditor in the firm. The third implication is on the policy standpoint whereby the government and professional bodies such as Malaysian Institute of Accountant should revised and set higher standard when granting membership and license to an auditor. In addition, Bursa Malaysia should revised its listing requirement in relation to audit firm service period in order to strengthen the audit firm’s independence.
