INFORMATIONAL VALUE OF TRANSPARENCY REPORTS REGARDING AUDIT QUALITY: EVIDENCE FROM SERBIA

High-quality auditing is a prerequisite for maintaining public trust in the profession. However, quality is not easily observable, so regulators mandate certain audit firms to disclosure information about their quality systems in transparency reports. The aim of this paper is to examine the potential of transparency reports to signal audit quality, with particular emphasis on audit firms operating in Serbia. Furthermore, study seeks to assess the progress in the transition to the new quality management regulation. The research is based on an analysis of the content of transparency reports published by audit firms operating in Serbia for 2022 and 2023. The focus of analysis is on disclosures related to their quality control or quality management systems, with a comparative analysis of the content conducted both across firms and over time. The authors found variations in both the form and content of the disclosed information. Some reports reflect tangible efforts to achieve quality, while others seem to function primarily as tools for compliance with regulatory requirements.