The Moderating Role of Regulatory Enforcement on the Relationship between Audit Firm Size, Engagement Team Competence, and Audit Quality of the Auditing Firms Operating in Tanzania

Abstract

Amid mixed global findings on the determinants of audit quality, the role of regulatory enforcement remains underexplored. This study examines the moderating role of regulatory enforcement on the relationship between audit firm size, engagement team competence, and audit quality in Tanzanian auditing firms. It uses a cross-sectional survey of 147 partners from Tanzanian auditingfirms and PLS-SEM to test hypotheses. The findings indicate that regulatory enforcement positively moderated the effect of engagement-team competence on audit quality (β = 0.116; p < 0.05) but negatively moderated the effect of audit firm size on audit quality (β = -0.143; p < 0.05). These results suggest that regulatory enforcement strengthens the impact of engagement-team competence on audit quality, but it weakens the positive relationship between audit firm size and audit quality. For regulators and policymakers, the findings emphasize the need to enforce regulations that enhance auditor competence to improve audit quality and reduce reliance on large firms by narrowing the quality gap across firm sizes. For audit firms, investing in engagement-team competence is vital as regulatory enforcement boosts its impact on audit quality. Since the study is cross-sectional and Tanzania-specific, causal interpretations are limited and findings may not apply elsewhere without further validation. Keywords: Audit quality, Engagement team competence, Audit firm size, Regulatory enforcement, Institutional Theory.