The main purpose of this study was to explore the practice of higher education quality audit in Ethiopia and the problems being encountered in the course of action. Specifically, the study attempted to examine the employed methods and procedures used by theEthiopian Higher Education Relevance and Quality Agency, HERQA, in assessing the quality of public higher education institutions.In view of the nature of the research topic, qualitative research method was used. Both documentary analysis and interviews were conducted in approaching the formulated research questions. While the Higher Education Proclamation, specifically the provision related to the establishment of HERQA, and the guidelines developed by the agency for undertaking institutional quality audit were analyzed, interviews were conducted with some of the experts of the agency. Data collected through interviewing were analyzed using the ad hoc meaning generation method as proposed by Kvale (1996).The findings of the study in general showed that the methods and procedures used to assess the quality of higher education by external experts were in line with the general model of higher education quality assessment where institutional quality audits wereconducted based on the institutions’ self evaluation reports. However, the findings showed that the agency itself was highly engaged in quality audits as its experts constituted 40% of the external evaluation expert groups.Although the guidelines developed by the agency emphasized that institutional quality audit has the purpose of quality improvement, it was found that the accountability function was also demonstrated: audit results involved certain degree of judgment; institutional quality audits were mainly initiated by the agency; audit reports were to be accessible for the public; and highly standardized procedures were used. However, the results of the assessment did not have any purpose of ranking and accrediting of institutions. Besides, it did not have any adverse link with funding of institutions.Higher education quality was defined ‘as fitness for purpose’ whereby quality of education in general is to be judged by assessing the extent to which the intended outcomes (graduates’ achievements) are being achieved. However, the employed methodologies and procedures of institutional quality audit as well as the results of the assessment were not in a position to guarantee this purpose.The findings of the study on the other hand showed that the course of undertaking institutional quality audit was faced with two major challenges; first, rigidity of the financial directives of the government with regards to payment for the services rendered; two, the leadership of some of the HEIs were less committed to the institutional quality audit.