The Affecting Factors of Audit Quality with Earnings Surprise Benchmark Approach as a Measure of Audit Quality

Abstract

This research examines whether abnormal audit fee, client importance, public accounting firm industry (PAF) specialization, public accounting firm (PAF) reputation, audit delay may affect the audit quality of manufacturing companies. This research used a quantitative method as a basis for assessing audit quality using the earnings surprise benchmark method, which emphasizes the profits generated by the company. This research used 350 data panel samples from manufacturing companies that have been listed on the Indonesia Stock Exchange (IDX) throughout 2013-2019. Sampling using non-probability with purposive sampling technique, and to analyze the data, the researcher used logistic regression because the dependent variable in this research only consisted of two values. This research shows that abnormal audit fees affect negatively significant to audit quality, while client importance and public accounting firm industry specialization affects positively significant to the audit. However, public accounting firm reputation does not have a positive effect on audit quality, and audit delay does not negatively affect significantly on audit quality. This research is the first time to examine abnormal audit fees on audit quality using earning surprise benchmark calculation method. Results from this research are expected to be beneficial for policy determination and audit standard development by related regulations and research development on audit quality.