The role of transformational leadership in audit teams: a key factor in the effective implementation of ISQM 1
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Abstract
Introduction: this paper analyzes the role of transformational leadership in audit teams as a determining factor for compliance with the International Quality Management Standard 1 (ISQM 1), issued by the International Auditing and Assurance Standards Board and in force since December 2022. The standard requires audit firms to design and implement a quality management system based on risk assessment, structured in eight interrelated components, among which the governance and leadership component occupies a principal place. Objectives: to analyze the role of transformational leadership as a key factor for the design, implementation and effective operation of the quality management system required by the standard, as well as to identify how the four dimensions of transformational leadership contribute to strengthening the culture of quality, professional skepticism and the auditor's commitment to the firm. Methodology: the use of dependent and independent variables is essential to understand how transformational leadership impacts ISQM 1 compliance in audit firms. The research was developed through a mixed design of a sequential explanatory type, combining a quantitative phase and a qualitative phase. Results: the results obtained reveal a significant and positive link between the dimensions of transformational leadership and the auditor's performance variables. The highest correlation was observed with the technical quality of the assignment, followed by organizational commitment and professional skepticism. Multiple regression models confirmed that intellectual stimulation is the strongest predictor of professional skepticism, while individualized consideration explains to a greater extent the auditor's intention to stay. Conclusions: Through the analysis, it was evident that idealized influence, inspirational motivation, intellectual stimulation, and individualized consideration have a direct impact on the technical quality of the engagement, professional skepticism, and auditor commitment, which in turn strengthens the firm's ability to sustain a robust quality management system. However, it is essential to continuously question and evaluate the leadership practices implemented, as they must adapt to the changing dynamics of the regulatory and technological environment of assurance. This link between transformational leadership and regulatory compliance underscores the importance of investing in leadership capability development as a strategic asset that delivers sustainable competitive advantages to audit firms. General area of study: Audit and Assurance. Specific area of study: Quality Management in Audit Firms (ISQM 1). Item Type: Original.
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