An analysis of the factors which influence dysfunctional auditor behavior

Juliyanty Sidik Tjan,Aulia Fuad Rahman,Eko Ganis Sukoharsono,Imam Subekti

doi:10.21511/ppm.17(1).2019.22

Juliyanty Sidik Tjan, Aulia Fuad Rahman + Show 2 more

Open Access

https://doi.org/10.21511/ppm.17(1).2019.22

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Abstract

This research aims at testing the influence of performance evaluation of efficiency focus, performance evaluation of quality focus and task complexity on dysfunctional auditor behavior (DAB), the influence of task complexity (TC) on turnover intention (TI) and the influence of task complexity on dysfunctional auditor behavior (DAB), which is mediated by turnover intention. This research is conducted to auditors of Public Accountant Offices (PAO) in cities in Jakarta, East Java, South Sulawesi and Bali using 262 respondents as its sample and PLS-SEM analysis. The results of this research indicate that the performance evaluation of efficiency focus and task complexity has a positive influence on DAB, and the performance evaluation of quality focus has a negative influence on DAB. Furthermore, task complexity has a positive influence on turnover intention and turnover intention also partially mediates the influence of task complexity on DAB. This research is interesting, since the idea of developing the variable performance evaluation of efficiency focus by adding the ratcheting budget indicator proves that the testing of performance evaluation of increasingly higher efficiency focus increases DAB and the idea of including the variable of turnover intention proves that it can mediate the influence of task complexity on DAB.

Highlights

The service of an independent auditor is needed to determine the reliability of financial statements presented by the management and to give a reasonable opinion to the financial statements in a credible way, it can be trustworthy and gain a better market share
This research aims at analyzing the influence of performance evaluation of efficiency focus, performance evaluation of quality focus and task complexity on dysfunctional auditor behavior (DAB)
This indicates and This research result confirms Johansen and gives an empirical evidence that the higher/tighter Christoffersen (2016), who find that the weaker the performance evaluation of efficiency focus is, the performance evaluation of quality focus, the the more likely the auditor will perform dysfunc- more likely is the auditor to perform dysfunctional behavior

Summary

Introduction

The service of an independent auditor is needed to determine the reliability of financial statements presented by the management and to give a reasonable opinion to the financial statements in a credible way, it can be trustworthy and gain a better market share. Non-compliance with PAPS and CE might lower the audit quality This non-compliance leads to violation cases and financial scandals, which hamper the auditor’s credibility. The notorious violation case is that of Enron in 2001 and several cases after this Enron domestically in 2017 and 2018 such as the ones which involve PAO Ernst & Young Indonesia, which was fined US$ 1 million or around Rp 13.3 billion by the United States’ Public Company Accounting Oversight Board on February 9, 2017 for giving the reasonable without exception opinion with no adequate evidences (Malik, 2017). Some other cases in Indonesia have led to the freezing of 6 (six) PAO’s by the Ministry of Finance and temporarily banned from operating for 3 to 12 months (IAPI, 2018)

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