The Effect of Lowballing on Auditor Independence and Audit Opinion (Case Study at the Public Accounting Office for the Special Capital Region of Jakarta)

Cris Kuntadi

doi:10.7176/rjfa/11-4-05

Abstract

This study aims to examine the effect of lowballing on auditor independence and audit opinion. This study uses a sample of 200 respondents who work as auditors in the Public Accountant Offices in the DKI Jakarta areas which are listed in the 2017 Public Accountants Office Directory published by the Indonesian Institute of Certified Public Accountants (IAPI). This study uses primary data with a questionnaire. Auditors participating in this study include junior auditors, senior auditors, managers and partners who carry out work in the field of auditing. The analytical method used to test hypotheses is Simple Linear Regression. The final results of this study are that Lowballing has a significant effect on Auditor Independence and Lowballing has a significant effect on Audit Opinion. Keywords : lowballing, auditor independence, Audit Opinion DOI: 10.7176/RJFA/11-4-05 Publication date: February 29 th 2020

Highlights

Similar to the research conducted by Elitzur and Falk (1966) his research proved that Lowballing influences auditor independence but with the dependent variable in the form of audit services
Lowballing research on giving audit opinion is the development of Dye's (1991) argument that lowballing encourages auditors to make opinions that benefit clients at the beginning of the period and this condition is used by auditors to earn revenue with the expectation that clients will engage in the following period
Research on lowballing and Audit Tenure on Audit opinions (2017) conducted by Firda states that the results indicate that lowballing influences audit opinion, whereas audit tenure has no influence on audit opinion

Summary

Data Analysis Method

A normal assumption test is performed to determine whether the variable compared to the average has been normally distributed. Decision-making is done by comparing the significance of the test results with a significance level of 0.05. One reason that makes data not normally distributed is because there are some data items that are outliers, that is, those that have values outside the normal limit compared to other data in a sample. For this reason, a trimming method is used, which is to discard the outliers data (Nugroho: 2005). The basis for decision making is that if the probability is greater than 0.05 Ha is rejected, meaning that there is no significant difference between the sample groups. If the probability is smaller than 0.05 Ha is accepted, meaning that there is a significant difference between the sample groups

Test Validity

RESEARCH RESULTS AND DISCUSSION

CONCLUSION

Findings

SUGGESTIONS