Abstract
This study aims to determine the ability of the audit quality provided by audit partners to be influenced by seasoned and unseasoned specialists using the Ordinary Least Square (OLS) regression method and discretionary loan loss provision (DLLP). This study shows that the audit quality provided by a specialist partner auditor is higher than the non-specialist. Furthermore, after classifying the specialist partner auditors as seasoned and unseasoned, the results showed that the audit quality provided by seasoned specialist partner auditors is higher than the non-specialist. While the audit quality provided by the unseasoned specialist partner auditor is almost the same as those provided by the non-specialist. This study contributes to literature on specialist auditors. The longer the audit partner is classified as a specialist, the higher the audit quality. Therefore, it can improve the quality of financial statements.
Highlights
DeAngelo (1981) defined audit quality as the probability of an auditor to detect and disclose violations committed by clients in their accounting system
This study aims to determine the ability of the audit quality provided by audit partners to be influenced by seasoned and unseasoned specialists using the Ordinary Least Square (OLS) regression method and discretionary loan loss provision (DLLP)
This study aimed to determine the effect of specialist auditors in an industry by considering the length of time required to become a specialist at the audit partner level
Summary
DeAngelo (1981) defined audit quality as the probability of an auditor to detect and disclose violations committed by clients in their accounting system. Pramaswaradana and Astika (2017) stated that auditors repeatedly acquire particular expertise or specialization in auditing the same company. The specialization of auditors in specific industries makes them acquire sufficient knowledge of that particular company (Pramaswaradana and Astika, 2017). Bae et al (2018) stated that auditors specialized in the industry provide high audit quality at lower costs through efficiency gains due to a large amount of knowledge. Several studies were carried out to discuss the factors influencing the audit quality, mandatory auditor rotations, and changes (Arthur et al, 2017; Bowlin et al.,2015; Febrianto et al, 2017; Idawati, 2014; Siregar & Elissabeth, 2018). Some of the other factors that improve audit quality, according to previous studies, are auditor's reputations, fee, competence, motivation, and specialization (Nadia, 2016; Idawati, 2014)
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