The adequate evaluation of sound quality is an important issue for the lossy compression codecs, such as MP3. ITU-R Rec BS. 1387-1 (PEAQ – Perceptual Evaluation of Audio Quality) is the most widely used method to evaluate sound quality objectively. However, PEAQ can only be used for mono signals or two channel stereo signals, because it considers only timbral factors when assessing sound quality. This paper introduces an improved objective quality assessment method that can be used for mono signals and multichannel audio signals that considers both “spatial” and “timbral” factors. The “spatial” factors, which measure perceptual distortions in spatial impression, are important to evaluate the quality of multichannel sounds.