Auditor Switching on the Basic Industry and Chemicals Sectors in Indonesia: Whether Influenced Management Change, Company Size, Going Concern Opinion, and Financial Distress?

Arry Eksandy ,Mulyadi ,Mohamad S Hakim ,Hesty Erviani Zulaecha ,Diana Rachmania

doi:10.7176/jesd/11-2-14

Abstract

This research aims to analyze the factors which influence the auditor switching on the basic industry and chemicals in Indonesia. The contribution of this research for the management of the company is as input on the policies to be taken up in connection with the implementation of switching Auditors, where as for the auditor or public accountant that is becoming one of the information about the practice of switching Auditors committed companies. Research variables used in this study is the changing of the management (CEO), the size of the company (LnTA), going concern opinion (OGC), financial distress (FD) and auditor switching (SWITCH). Analysis tool used is logistic regression with panel data using program EViews (Econometric Views) version 9.0. The sample of this research is the basic industry and chemicals companies were listed on the Indonesia stock exchange (BEI) in 2011-2015 amounted to 45 companies that are taken using the method of purposive sampling. The results of this research is to turn management of the positive effect to auditor switching. While the size of the company, opinion going concern and financial distress had no effect to auditor switching. Keywords: Auditor Switching, Management Requirement, Size Company, Going Concern, Opinion, Financial Distress. DOI : 10.7176/JESD/11-2-14 Publication date: January 31 st 2020

Highlights

The financial statements should be presented by management as a performance management
Because of significant value (0.132) > α (0.05), it can be concluded that the second hypothesis is rejected, meaning that the company's size has no effect against the auditor switching
The results of this study in accordance with the Suarjana research and Widhiyani (2015) and Suryanti (2015) which found that large companies have used the Auditors are great so there is no need to replace Auditors, while small companies still use KAP and haven't felt the need to replace the KAP. 3) Going Concern Opinion to Auditor Switching

Summary

Introduction

The financial statements should be presented by management as a performance management. The financial statements have the possibility for outside interests were interfered corporate interests from the management it self so needed an independent, in this case a public accountant (auditor) to mediate the conflict of interest between shareholders with management companies (Suarjana and Widhiyani, 2015). When auditors provide an opinion not in accordance with the desires, they tend to dismiss Auditors. This is in line with the Wahyuningsih and Suryanawa (2012) stating if the auditor cannot give unqualified opinion (not in keeping with the expectations of the company), the company will move the public Accountant (KAP) which might be able to provide opinion as expected

Objectives

Methods

Conclusion