Analysis of the Effect of Auditor Independence, and Auditor Ethics on Audit Quality at a Public Accounting Firm in Medan City with Auditor Experience as a Moderating Variable

Dennys Paulus Parlindungan Damanik

doi:10.47191/jefms/v4-i8-28

Abstract

This study aims to determine the effect of auditor’s independence and auditor’s ethics on audit quality at public accountant office in Medan city with auditor’s experience as moderating variable. The method used in this study is a correlational research that study the relationship of independent variables namely auditor’s independence and auditor’s ethics with dependent variable namely audit quality and moderation variable namely audit quality. The study population was 186 auditors with sample of 45 auditors determine using purposive sampling technique. The technique of collecting data using a questionaire. Data of questionaire was analyzed with SmartPLS. The process is starting with evaluating of the measuring model than continue with the evaluating of the structural model. The result show that the measuring model has been valid and reliable and can be accepted substantially. The evaluating result of structural model show that auditor’s independence and auditor’s ethics have positive effect but not significant on audit quality. The auditor’s experience does not moderate the relationship of auditor’s independence and auditor’s ethics on audit quality.

Highlights

The financial statements of a company that are reliable and can be accounted for are a necessity for every company today
This study will focus more on the effect of Auditor Independence, Auditor Ethics on Audit Quality with Auditor Experience as the moderating variable, Olek this study aims to examine whether auditor independence and ethics can affect audit quality, and whether auditor experience can affect the relationship between independence with Audit Quality and whether Auditor Experience can affect the relationship between Audit Ethics and Audit Quality
Based on the results of the analysis and discussion described in the previous chapter, the researchers drew the following conclusions: 1. From the results of the analysis using SmartPLS, it can be concluded that auditor independence has a positive but not significant effect on audit quality

Summary

Introduction

The financial statements of a company that are reliable and can be accounted for are a necessity for every company today. The auditor is a guarantor for third parties who base their trust on the financial statements This is a form of accountability from managers in maintaining the trust and interests of investors. Because audits are the main mechanism in the business world, auditors are expected to produce quality audits so as to reduce the misalignment that occurs between management and parties outside the company. That auditors who can carry out appropriate assessments are expected to produce quality audit results. The public accounting profession is highly expected by the public to be able to provide an independent and impartial assessment of anyone on the information presented by the company's management in the financial statements (Mulyadi and Puradireja, 1998). Audit quality is influenced by several factors, including auditor independence and auditor ethics. Considering the role of auditors which is very much needed by people in the business world, auditors have an JEFMS, Volume 4 Issue 08 August 2021 www.ijefm.co.in

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Conclusion