Auditor Turnover Research Articles

Spesialisasi Auditor Memoderasi Kualitas Kantor Akuntan Publik, Opini Audit, Pergantian Auditor Terhadap Audit Report Lag

The purpose of this study was to analyze the effect of the quality of the Public Accounting Firm (KAP), audit opinion, and auditor turnover on audit report lag with auditor specialization as a moderating variable. The research was carried out on companies in the agricultural sector of the plantation sub-sector listed on the Indonesia Stock Exchange for the 2017-2019 period. The sample data used were 13 companies with purposive sampling method, data were analyzed using the WarpPLS application with a Structural Equation Modeling (SEM) approach based on Partial Least Square (PLS), while the measurement of variables used dummy variables. The results show that the quality of KAP has a negative effect, so that it has an impact on shortening the audit report lag, while audit opinion and auditor turnover have no effect on audit report lag. Auditor specialization is able to strengthen the influence of audit opinion on audit report lag, so as to shorten audit report lag. Auditor specialization is not able to strengthen the effect of auditor turnover and KAP quality on audit report lag, so it can prolong audit report lag.
 Keywords : KAP Quality; Audit Opinion; Auditor Change; Auditor Specialization; Audit Report Lag.

Individual Auditor Turnover and Audit Quality – Large Sample Evidence from U.S. Audit Offices

Individual Auditor Turnover and Audit Quality – Large Sample Evidence from U.S. Audit Offices

Does Fraud Pentagon cause financial report manipulation?

The most visible measure of a company's health is its financial reports. This critical function may motivate management to engage in fraudulent activities to impress that the company is constantly in good shape and profitable. As a result, the information is distorted and potentially jeopardizes investment decisions. Therefore, it is crucial to find a way to detect that deviant behavior. This research aims to fulfill this requirement. Using the period of 2017-2019 as the sample timeframe, the authors pay attention to the IDX30 version companies listed on the IDX. Financial statement fraud, financial stability, financial targets, industry type, poor supervision, auditor turnover, change of directors, and the frequency of appearance of CEO images are the variables under investigation. The secondary data from 48 units of analysis were analyzed using logistic regression. Financial stability and industry structure have a significant effect on financial statement fraud. Other variables under investigation have little effect. Original Article | Turnitin

Pengaruh Profitabilitas, Opini Audit, Ukuran Perusahaan Dan Pergantian Auditor Terhadap Audit Delay Dengan Audit Tenure Sebagai Variabel Moderating Pada Perusahaan Manufaktur Yang Terdaftar Di Bursa Efek Indonesia

Companies that enter the Indonesian capital market must publish financial statements that have been audited by an independent auditor no later than 90 days after the end of the annual financial reporting period, which is March 31. This study aims to determine the effect of profitability, audit opinion, company size and auditor turnover on audit delay with audit tenure as a moderating variable in Manufacturing Companies listed on the Indonesia Stock Exchange. This study uses associative. The population in this study were 177 financial statements of manufacturing companies. The research sample is 31 financial statements. The result is that profitability, audit opinion and auditor turnover have no effect on audit delay of consumer goods companies listed on the Indonesia Stock Exchange. Company size has an effect on audit delay in Consumer Goods Companies listed on the Indonesia Stock Exchange that profitability, audit opinion, company size, and auditor turnover simultaneously have a positive and significant effect on audit delay. Audit tenure is not a moderating variable that can strengthen or weaken the relationship between profitability, company size, audit opinion, auditor turnover and audit delay in manufacturing companies listed on the Indonesia Stock Exchange.
 
 Keyword: Profitability, Audit Opinion, Company Size, Auditor Switching Audit Delay and Audit Tenure

Pengaruh Komite Audit, Likuiditas, Pergantian Auditor Dan Kompleksitas Operasi Terhadap Ketepatan Waktu Pelaporan Keuangan (Studi Pada Perusahaan Sub Sektor Perdagangan Besar (Grosir) Yang Terdaftar Di Bursa Efek Indonesia (BEI) Tahun 2017-2019)

This study analyses the effect of audit committee variables, liquidity, auditor turnover and operating complexity on the timeliness of financial reporting. The data used are secondary data in the form of annual reports and financial reports of large trading sub-sector companies (wholesale) listed on the Indonesia Stock Exchange in 2017-2019. The technique for selecting the sample used purposive sampling to obtain a sample of 22 companies. The data analysis used is descriptive statistics and logistic regression analysis with the SPSS 25 program. The results of this study state that liquidity has a positive and significant effect on the timeliness of financial reporting, while the audit committee, auditor turnover and operating complexity do not affect the timeliness of financial reporting.Keywords: Audit Committee, Liquidity, Auditor Turnover, Complexity Of Operations, Timeliness Of Financial Reporting.

Detecting Indications of Financial Statement Fraud: a Hexagon Fraud Theory Approach

This study emphasizes on examining the fraud hexagon theory referring to signs of fraud of financial statements, which employs all manufacturing companies listed in the IDX (Indonesia Stock Exchange). However, total selected sample are 153 of the manufacturing industry. The companies are categorized into indicated and not indicated committing fraud in the 2010-2018 period by applying the Beneish M-Score. The findings demonstrated that financial stability, the financial targets, the external pressures, the nature of industry, and CEO duality can be applied to predict fraud of financial statements. Meanwhile, personal financial needs, ineffective monitoring, quality of external auditors, auditor turnover, director turnover, and marginal costs cannot indicate occurrence of the fraud of financial statement. The findings conclude that pressure, ego, and opportunity significantly affect the financial statement fraud. Future research are suggested to consider different proxies for fraudulent financial statements; hence, the accuracy of the proxies can be compared with this study. Moreover, adding other proxies of conspiracy such as bonuses received by managers will be beneficial.

Pergantian Manajemen dan Opini Auditor Serta Pengaruhnya Terhadap Pergantian Auditor

Abstract: This study aims to examine the effect of audit opinion and management turnover on auditor turnover because the results of previous studies have different empirical results. The source of data used in this study is secondary data, namely the annual report of manufacturing companies in the food and beverage sub-sector which is accessed through www.idx.co.id. The number of population sampled in this study were 13 companies with 3 years of observation. Determination of the sample using purposive sampling method. The regression used in this study uses logistic regression analysis. The results showed that the variables of audit opinion and management change had no effect on auditor auditor change.

Pengaruh Ukuran Kap, Opini Audit dan Pergantian Manajemen terhadap Auditor Switching (Studi Pada Perusahaan Bumn yang Terdaftar di Bursa Efek Indonesia)

This study aims to determine whether the size of KAP, audit opinion and management turnover have an effect on auditor turnover in state-owned companies listed on the Indonesia Stock Exchange. Data collection uses secondary data obtained from the STIEM Bongaya Investment Gallery. The population is state-owned companies listed on the Stock Exchange, totaling 26 companies, while the sample taken is 19 companies, with the observation method for 4 years, the total companies observed are 76 companies. The sampling technique used purposive sampling method and the data results were processed using logistic regression analysis method with the help of SPSS 26 software.The results show that partially only audit opinion has an effect on auditor switching, while the size of KAP and management change has no effect on auditor switching. Keywords: KAP Size, Audit Opinion, Management Change, Auditor Change

ANALISIS DIAMOND FRAUD THEORY DALAM MENDETEKSI KECURANGAN LAPORAN KEUANGAN Studi Kasus Pada Industri Keuangan Dan Industri Manufaktur Yang Terdaftar Di Bursa Efek Indonesia

Fraud is a threat to an entity and is a problem that continues to this day. Thus the purpose of this study is to examine the effect of variables from elements of the diamond fraud theory which include financial stability, external pressure, financial targets, personal financial needs, number of audit committee members, nature of industry, auditor turnover, and auditor turnover on fraudulent financial statement of financial and manufacturing industry companies listed on the Indonesia Stock Exchange. The samples used in this study were 67 financial industry companies and 67 manufacturing industrial companies in the 2014-2019 period. The data were analyzed using logistic regression because the fraudulent financial statement variable in this study is a dummy variable whose determination is based on the calculation of the Altman Z Score. The findings of this study indicate that of the 8 elements of the diamond fraud theory variable, only external pressure and financial target variables have an effect on fraudulent financial statements in financial industry companies, while in the manufacturing industry only external pressure and nature of industry variables have a significant effect. Keywords :diamond fraud theory, fraudulent financial statement, financial stability, personal financial need, number of audit committee members, nature of industry, change of auditors, and change of directors

Faktor-Faktor dalam Mendeteksi Kecurangan pada Laporan Keuangan dengan Metode Fraud Diamond

The purpose of this research is to obtain empirical evidence regarding the effect of financial stability, external pressure, financial targets, the nature of the industry, effective monitoring, change of auditors, change of directors, institutional ownership and quality of external auditors as independent variables in detecting the likelihood of fraudulent financial reporting using fraud diamond methods. The population used in this research is manufacturing companies listed on the Indonesia Stock Exchange (IDX) during 2018-2020. The sample used for this research consists of 40 listed manufacturing companies. The selection of these sample used the purposive sampling method with total 120 data and to analyze the data using multiple regression analysis. The research findings reveal that the nature of the manufacture industry and quality of external auditor are proven to have an influence in detecting the likelihood of fraudulent financial reporting. In the meantime, financial stability, external pressure, financial targets, effective monitoring, auditor turnover, change of directors and institutional ownership have no influence in detecting the likelihood of fraudulent financial reporting.

Pengaruh Opini Audit, Umur Perusahaan, Profitabilitas, Dan Pergantian Auditor Terhadap Audit Report Lag Pada Perusahaan Manufaktur Yang Terdapat Di Bursa Efek Indonesia (BEI) Pada Tahun 2017 – 2019

The purpose of this discussion is to review the related audit opinion, company age, profitability, as well as the change of auditors in the manufacturing industry listed on the Indonesia Stock Exchange for the period 2017-2019. Researchers use quantitative research methods, meaning the data is obtained in www.idx.co.id The population of 182 issuers, while the sampling technique is purposive sampling, so the number of samples is 65 issuers with the period 2017-2019. The Hypothesis test used is logistic regression. The result is partially significant value of audit opinion 0.999 > 0.05, company age 0.008 < 0.05, profitability 0.554 > 0.05, auditor turnover 0.612 > 0.05, simultaneously significant value obtained by 0.00 < 0.05. From these results, it was concluded that audit opinions, profitability, and auditor turnover do not influence audit report lag. Meanwhile, the age of the company has an association over audit report lag, and simultaneously there is an influence between audit opinions, the age of the company, profitability, and the change of auditors on audit report lag.
 Keywords : Audit opinion; company age; profitability; auditor turnover; audit report lag.

Is There a Brain Drain in Auditing? The Determinants and Consequences of Auditors Leaving Public Accounting*

ABSTRACTThis study investigates why auditors leave public accounting and the consequences of auditor departures, both of which have been of great concern for audit firms and regulators worldwide. Using data from China and controlling for demographics, we find that audit partners and managers, auditors who generate more revenue, and auditors who provide higher audit quality have a lower likelihood of departure, while non–Big 4 auditors have a higher likelihood of departing public accounting. We also find that an audit firm is likely to lose clients when an auditor departs. Clients who stay with the same firm pay lower audit fees but with no drop‐off in audit quality after a signing auditor departs. In supplementary analyses, we also demonstrate that the determinants and consequences of auditor departures are different for auditors who leave the firm but not the profession (i.e., auditor turnover). Specifically, high audit quality is associated with a lower likelihood of auditor departure, but it increases auditor turnover. We also observe that audit quality is reduced for the clients who stay with an audit firm after highly skilled auditors depart for high‐visibility corporate positions. Our study provides insights that should be of interest to the audit profession, audit firms, and regulators.

PENGARUH PERGANTIAN AUDITOR, UKURAN PERUSAHAAN, LABA RUGI DAN SOLVABILITAS TERHADAP AUDIT REPORT LAG (SEKTOR INDUSTRI DASAR KIMIA, BARANG KONSUMSI DAN ANEKA INDUSTRI)

The Basic Industry and Chemicals, Consumer Goods, and Various Industries sectors are companies that are developing very rapidly and well. Audit report lag is the time span for completing an annual financial statement audit, measured by the number of days required to obtain an independent auditor's report on the audit. the company's annual financial statements. The method used in this research is a quantitative approach, the type of this research is descriptive research and the nature of this research is cause and effect research. The data collection method used is to use documentation techniques. The data analysis method used is logistic regression. The population is all companies listed on the Indonesia Stock Exchange in the Basic and Chemical Industry Sector, Consumer Products and Various Industries. Determination of the sample in this study by looking at whether companies in the population report financial statements that have been audited on time or not. The results on the hypothesis show that auditor turnover, firm size, profit and loss and solvency simultaneously have no effect on audit report lag. The conclusion of this study is that simultaneously and partially auditor turnover, firm size, profit and loss and solvency have no significant effect on audit report lag.

Effects of managerial overconfidence and ability on going-concern decisions and auditor turnover

I examine how the appearance of managerial overconfidence and managerial ability affect 1) auditors' decisions to issue a going concern opinion and 2) auditor dismissal rates after issuing a going concern opinion. Managerial attributes are likely to have an influence on auditors' decisions because auditors obtain and evaluate information about client management's remedy plans when there is substantial doubt about the entity's ability to continue as a going concern. While prior literature on managerial overconfidence classifies all managers who demonstrate overconfident behaviors in one group, I argue that the literature needs to take managerial ability into consideration when measuring overconfidence. I find that auditors are more likely to issue a going concern opinion to clients with seemingly overconfident managers only when the management who appears overconfident is also incompetent. I also find that auditors are more likely to be dismissed after issuance of a going concern opinion when the client company has seemingly overconfident management. Finally, I find that the association between managerial overconfidence and auditor dismissal subsequent to issuance of a going concern opinion is stronger when management is relatively more powerful than the company's audit committee.

Toward an understanding of year-over-year changes in municipal management discussion and analysis disclosures

SynopsisUsing a unique setting in which the standard setter (the Governmental Accounting Standards Board) provides guidance on the content of Management Discussion and Analysis (MD&A) disclosures, we investigate the determinants of content changes in municipal government MD&A. We do so in terms of economic changes, turnover, and regulatory characteristics. We use a sample of 1142 municipal MD&A disclosures from fiscal year 2011 to 2015 to calculate a difference score based on the degree to which municipal MD&As change from the previous year. Our empirical analysis highlights that MD&A content changes vary directly with changes in the unemployment rate, fund balance from governmental funds, and auditor turnover. Furthermore, we find evidence that MD&A content changes might be more likely in states without formal GAAP mandates, possibly implying that municipal managers increase transparency by complementing reported financial information with additional qualitative commentary in narrative disclosures when states do not centralize fiscal control over municipalities. Overall, our analysis provides insight on the use of qualitative disclosure by municipal managers, and highlights a need for enhanced commentary on certain items (such as debt and capital expenditures) in order to create greater credibility with and accountability to citizens and other financial statement users. This research is especially timely as GASB re-examines the disclosure mandates of GASB 34.

Auditors’ response to corporate fraud: evidence from audit fees and auditor turnover

PurposeThis study aims to examine how auditors respond to the revelation of clients’ corporate fraud.Design/methodology/approachThis study uses an ordinary least squares estimation to examine how audit fees and audit turnover change after the revelation of corporate fraud.FindingsAfter a client discloses fraudulent activities, average audit fees significantly increase due to an increase in audit hours, rather than in audit premiums. Both new and continuing auditors increase audit hours for fraud firms, but only new auditors charge higher audit fees for the increased effort. In addition, when auditors are designated by regulators following the revelation of fraud, audit fees and premiums increase, but audit hours do not. Finally, auditor turnover becomes more frequent after the revelation of fraud. Overall, the findings suggest that auditors update their assessment of audit risks after fraud revelation and, thus, adjust their audit pricing and client acceptance decisions.Practical implicationsThe study provides regulators and audit practitioners with insights into how to audit contract characteristics and regulatory intervention (auditor designations) affect auditors’ response to increased audit risks.Originality/valueThe study contributes to the auditing literature and practice by providing evidence on how auditors respond to the revelation of fraudulent activities and how their response depends on their ability to determine audit fees. Moreover, we provide novel evidence that audit contracting characteristics and regulatory requirements result in different responses of auditors toward changes in audit risks.

Hometown Ties and the Quality of Government Monitoring: Evidence from Rotation of Chinese Auditors

Audits are a standard mechanism for reducing corruption in government investments. The quality of audits themselves, however, may be affected by relationships between auditor and target. We study whether provincial chief auditors in China show greater leniency in evaluating prefecture governments in their hometowns. In city-fixed-effect specifications—in which the role of shared background is identified from auditor turnover—we show that hometown auditors find 38 percent less in questionable monies. This hometown effect is similar throughout the auditor’s tenure and is diminished for audits ordered by the provincial Organization Department as a result of the departure of top city officials. We argue that our findings are most readily explained by leniency toward local officials rather than an endogenous response to concerns of better enforcement by hometown auditors. We complement these city-level findings with firm-level analyses of earnings manipulation by state-owned enterprises (SOE) via real activity manipulation (a standard measure from the accounting literature), which we show is higher under hometown auditors. (JEL D73, H54, H83, L32, M42, O18, P25)

Auditor Response to Estimated Misstatement Risk: A Machine Learning Approach

SYNOPSISWe investigate whether misstatement risk estimated using advanced machine learning techniques—hereafter, estimated misstatement risk (EMR)—approximates auditors' risk assessments in practice. We find that auditors price EMR and auditor turnover is more likely to occur when EMR increases, indicating that EMR is associated with auditors' risk assessment. We also find evidence that EMR is positively and significantly associated with audit fees and auditor switching for companies with Big N auditors but not for other companies, suggesting that Big N auditors are more responsive to risks captured by EMR. Additional analyses reveal that companies switching auditors when EMR increases are more likely to engage non-Big N auditors. Surprisingly, we find little evidence that the association between audit quality and EMR differs by auditor type. Our findings are consistent with the notion that the documented association between audit fees and EMR primarily reflects a risk premium in our setting.

Analysis of The Influence of Pentagon Fraud in Detecting Financial Statement Fraud Using Method F- Score

This study aims to examine the elements of fraud in the fraud pentagon theory in detecting financial statement fraud. Pentagon fraud is variables from the pressure element, opportunity, rationalization, capability, and elements of arrogance, namely political relationships which are hypothesized to affect financial statement fraud. The F-Score method is used to determine financial statement fraud. This research sample was selected using the purposive sampling method from 47 manufacturing companies in the basic industry and chemicals industry listed on the Indonesia Stock Exchange (BEI) in the period 2015 to 2019. Hypothesis testing uses multiple regression analysis models using SPSS 22 to test the effect of the target. finance, financial stability, external pressure, institutional share ownership, ineffective supervision, influence on the nature of the industry, quality of external auditors, replacement of auditors, change of directors and political relations to financial statement fraud. The results showed that the quality of external auditors and auditor turnover had a significant positive effect on financial statement fraud. Meanwhile, financial targets, financial stability, external pressure, institutional share ownership, ineffective supervision, the influence of the nature of the industry, the change of directors, and political relations have no effect on financial statement fraud.

Pengaruh Financial Distress, Pergantian Auditor dan Manajemen Laba terhadap Audit Delay

This study aims to determine the influence of financial distress, auditor turnover and earnings management on audit delay in Mining Sector companies listed on the Indonesia Stock Exchange (2017-2019). This type of research is quantitative. The sample was selected based on the purposive sampling method, so that the samples obtained were 42 companies. The data analysis technique used is multiple linear regression analysis, with data processing using the SPSS 25.0 for window program. The results showed that simultaneously the variable financial distress, auditor turnover and earnings management have an effect on audit delay. Meanwhile, partially financial distress, auditor turnover and earnings management have an effect on audit delay Keywords : Financial Distress, Auditor Change, Earnings Management, Audit Delay