Auditor Changes Research Articles

Pengaruh Fraud Hexagon terhadap Kecurangan Laporan Keuangan pada Perusahaan Sektor Industri yang Terdaftar di BEI Tahun 2019-2022

This study aims to investigate the influence of the fraud hexagon, comprising stimulus, opportunity, rationalization, capability, arrogance, and collusion, on instances of financial statement fraud within the industrial sector listed on the Indonesia Stock Exchange from 2019 to 2022, involving 48 companies. The components of the fraud hexagon are operationalized as follows: financial targets represent the stimulus, nature of industry proxy for opportunities, auditor changes indicate rationalization, director change signify capabilities, the frequent presence of CEO pictures reflects arrogance, and collaborations with government projects represent collusion. Through purposive sampling, 33 companies meeting specific criteria were selected, resulting in a total of 132 observations. Logistic regression was employed for data analysis, with IBM SPSS 26 used for data processing. The study's findings reveal that financial targets, nature of industry, auditor changes, director change, and the frequency of CEO pictures do not exert influence on financial statement fraud. However, collaboration with government projects is identified as a factor impacting financial statement fraud.

Deferred Tax Impact on Auditor Change

Deferred Tax Impact on Auditor Change

Pengaruh Financial Stability, Nature Of Industry, Dan Change In Auditor Terhadap Financial Statements Fraud

Fraud is an illegal activity that harms the company and benefits the perpetrator. According to the understanding of many experts, fraud refers to intentional misrepresentation for a specific purpose. Original research or studies on important scientific research or topics. Basic research or research activities involve verifying ideas and facts that show relationships or influences between variables. This article examines the factors that influence Financial Statements Fraud: Financial Stability, Nature of Industry, and Change in Auditors, which is a study of investigative audit literature. The purpose of writing this article is to create a hypothesis that will be used in further research regarding the influence between variables. The findings from this literature review are: 1) Financial Stability influences Financial Statements Fraud, 2) Nature of Industry influences Financial Statements Fraud, and 3) Change in Auditor influences Financial Statements Fraud.

Is audit firms' social performance associated with audit firm reputation? Evidence from China

We use the data of Chinese audit firms' philanthropic activities to examine the effect of such activities on audit firms' financial performance, audit quality and auditor retention. We find that audit firms with more socially responsible activities in the prior year earn more total revenues, revenue per partner or shareholder and revenue per accountant in the current year. Besides, clients audited by socially responsible audit firms have higher audit quality and report lower income‐increasing accruals, higher income‐decreasing accruals, fewer below‐the‐line items and less frequent small positive earnings. More interestingly, clients with socially responsible audit firms have fewer auditor changes.

NON-CYCLICAL INDUSTRIAL PERFORMANCE IN INDONESIA: THE MODERATION OF AUDIT QUALITY

This study aims to analyze the factors of hexagon fraud in detecting financial statement fraud in non-cyclical sector companies listed on the Indonesia Stock Exchange (IDX) for the 2020-2022. Based on the purposive sampling method, the number of companies sampled in this study was 33 research criteria of non-cyclical companies with a total of 66 observations. The results of this study found that the element of pressure proxied by government projects had a significant effect on fraudulent financial statements. Meanwhile, financial targets, financial stability, changes in directors, ineffective monitoring, change in auditors, frequent number of CEO's pictures, political connections, state-owned enterprises, and audit opinions have no significant effect on fraudulent financial reports in non-cyclicals sector companies listed on the IDX 2020-2021.

Factors that Influence Auditor Switching in Banks Listed on the BEI

The aim of this research is to examine the impact of going concern audit opinion, financial distress, company complexity, institutional ownership, and company size on auditor switching. And in this research we also added a moderating variable, namely audit fees, to test the role of audit fees in moderating the relationship between factors that influence auditor switching. This research focuses on bank companies listed on the Indonesia Stock Exchange in 2019-2022. The data collection technique uses a purposive sampling method with a total of 164 data, taken from 41 banks listed on the Indonesia Stock Exchange. This research uses multiple linear regression analysis techniques and interaction tests or MRA (Moderated Regression Analysis). This calculation analysis was carried out with the help of SPSS software. The research results show that going concern audit opinion has a positive effect on auditor switching, while company complexity has a negative effect on auditor switching. However, factors such as financial distress, institutional ownership and company size have no influence on auditor change. Apart from that, the size of the audit fee does not moderate the relationship between the factors that influence a company's decision to change auditors.

Can The Diamond Fraud Model Influence the Occurrence of Fraudulent Financial Reporting?

This research is quantitative in nature and is intended to examine whether can the diamond fraud model influence the occurrence of fraudulent financial reporting. The fraud diamond theory is measured by pressure (financial stability, financial targets, and external pressure), opportunity (ineffective monitoring), rationalization (change in auditor), and capability (change of director). State-owned business (BUMN) registered on the stock exchange of Indonesia between 2016 and 2022 comprise the population considered within this research. Purposive sampling was utilized in this research to select 154 companies for the sample. In this work, logistic regression analysis is the analytical method. The findings within this research show that the variables of financial stability and financial targets have a significant negative impact on the occurrence of fraudulent financial reporting, while the variables of external pressure and director change do not affect the occurrence of fraudulent financial reporting. The variables of ineffective monitoring and change in auditors also affect the occurrence of fraudulent financial reporting .

FRAUD HEXAGON THEORY AND FRAUDULENT FINANCIAL STATEMENTS IN BASIC INDUSTRIAL AND CHEMICAL SECTOR COMPANIES LISTED ON THE IDX

Financial statement fraud (FSF) is the act of reporting inaccurate or distorted financial information to manipulate company performance or gain illegitimate personal gain. This research examines the influence of elements in the Hexagon Fraud on financial statement fraud. The analytical method used in this research is multiple linear analysis using purposive sampling technique to select the research sample. The sample for this research was 19 companies in the basic industrial and chemical sectors listed on the IDX from 2021 to 2022 with a 2-year observation period, totaling 38 sample companies. The results obtained are as follows: (X1) Financial stability as an element of Stimulus measurement in the fraud hexagon theory, (X2) frequent number of CEO Picture as an element of Ego measurement in the fraud hexagon theory, (X3) Change in auditor as an element of Rationalization measurement in the hexagon fraud theory, (X4) nature of industry as an element of Opportunity measurement in the hexagon fraud theory, (X5) change of directors as an element of Capability measurement in the fraud hexagon theory, and (X6) government projects as elements of Collusion measurement in the hexagon fraud theory. Simultaneously, they influence fraud in financial statements, while Stimulus, Ego, Rationalization, and Opportunity have no influence on financial statements. Capability and Collusion influence financial statement fraud

The Beneish M-Score Model in Detecting Fraudulent Financial Reporting: The Hexagon Perspective Theory

This research aims to investigate the effect of fraud on fraudulent financial reports (FFR) using the hexagon theory. The seven factors were financial stability, external pressure, ineffective monitoring, auditor changes, director changes, arrogance, and collusion. This study has a population of health companies listed on the IDX in 2018-2021. This study uses a quantitative approach. Based on the logistic regression analysis, the study finds that financial stability, change director, and arrogance affect FFR. On the other hand, external pressure, ineffective monitoring, auditor change, and collusion do not affect FFR. Keywords:Fraudulent financial reporting, Hexagon theory, Beneish M-Score

Financial Statement Fraud Detection: The Hexagon Fraud Model Approach

The purpose of this study is to examine the likelihood of financial statement fraud using the fraud hexagon model, including pressure (financial stability), opportunity (ineffective monitoring), rationalization (auditor change), capability (director change), arrogance (frequent CEO pictures), and conspiracy (connection with government projects) on financial statement fraud. The sample of this study is manufacturing companies listed on the Indonesian Stock Exchange from 2019 to 2021, with a total of 73 companies. The data was processed using SPSS 22 software. The results of this study indicate that financial stability has a positive effect on financial statement fraud. However, ineffective monitoring, change of auditor, change of directors, frequent number of CEO pictures, and connection with government projects do not affect financial statement fraud.

Faktor-Faktor Yang Mempengaruhi Kualitas Audit Perusahaan LQ45

This study examines the factors influencing audit quality, namely firm size, audit rotation, and audit tenure in companies listed in the LQ45 index on the Indonesia Stock Exchange during the period 2020 to 2022. Data were collected from company financial reports and the Indonesia Stock Exchange official website, then analyzed using multiple linear regression. The results indicate that firm size has a positive relationship with audit quality, suggesting that larger companies tend to have better internal controls and risk management. Audit tenure also has a positive relationship with audit quality. Additionally, audit rotation positively influences audit quality, indicating that periodic auditor changes can reduce bias and enhance auditor independence. These findings provide valuable insights for practitioners and regulators in managing relationships with auditors and considering audit rotation policies.

The audit of banks in the USA: Has it changed since the financial crisis?

The most recent financial crisis exposed to the auditors the risk associated with the audit engagement of their banking clients. Because many banking clients failed and investors suffered trillions of dollars in losses, auditors are now defendants in numerous shareholder and regulatory lawsuits. There is consensus that the financial crisis was created by an abundance of credit, excessive risk taking through complex financial instruments, weak corporate structures, and ineffective regulatory mechanisms. In this study, we examine how the financial crisis has affected the audit engagements of banking clients. We examine audit fees, audit report lag, and auditor changes before and after the financial crisis with respect to specific bank risks like credit risk, interest rate risk, and liquidity. Overall, we find that auditors are more responsive to bank risks in the post-financial crisis period compared to the pre-financial crisis period.

The Impact of SEC Comment Letters on Auditor Retention

SYNOPSIS Prior literature shows that the receipt of an SEC comment letter strains the auditor-client relationship by increasing the likelihood of a change in auditor. This paper examines this result by investigating whether an auditor’s involvement in responding to comment letters mitigates this effect. Although comment letters are frequently associated with financial reporting issues, clients and auditors may perceive the issues and blame for issues differently, thereby creating friction in the auditor-client relationship. By involving auditors in responding to comment letters, clients demonstrate a better working relationship with their auditor, which may lead to auditor continuance. This study indicates that although auditor switching increases after receipt of an accounting-related comment letter, auditor involvement in responding to the SEC reduces the likelihood of an auditor change in the following period. This suggests that auditor involvement in comment letter responses strengthens the auditor-client relationship.

FINANCIAL REPORTING FRAUD: AUDIT COMMITTEE AS MODERATION

This study aims to investigate the influence of the audit committee in moderating the association between financial targets, financial stability, changes in directors, ineffective supervision, optimal conditions of the company, changes in auditors, the CEO's photograph, government projects, political connections, and managerial ownership on financial statement fraud. When examining instances of financial statement fraud, it is important to take into account the involvement of the audit committee in addition to other variables. The Beneish M-Score Model is used to quantify financial statement fraud. The study focuses on analyzing a sample of 49 infrastructure sector companies listed on the Indonesia Stock Exchange (IDX) between 2020 - 2021. The analysis employs panel data regression analysis with 98 units, utilizing the EViews 13 analytical tool to test the hypothesis. The findings of this study indicate that a company's financial target significantly impacts the likelihood of financial statement fraud. Factors such as financial stability, changes in directors, monitoring, the company's ideal condition, changes in auditors, CEO photographs, government projects, political connections, and managerial ownership do not affect the likelihood of financial statement fraud. The presence of an audit committee has a moderating effect on the occurrence of financial statement fraud as each independent variable becomes less influential.

Analysis of The Factors That Influence Auditor Switching in Bank Companies Listed on The Indonesian Stock Exchange in 2017-2021

Auditor switching is a change of KAP or auditor made by the company for a reason or there are certain factors from the company and from the auditor itself. Auditor Switching in Indonesia is one of the regulations required by the Indonesian government as an effort to maintain auditor independence. This study aims to analyse the effect of audit opinion, institutional ownership, management change, and financial distress on auditor switching. The results of this study reveal several important findings. First, Audit Opinion has an insignificant influence on auditor switching this is because in general the sample of banking companies mostly get an unqualified opinion. Second, Institutional Ownership has an insignificant influence on auditor switching because the high proportion of institutional ownership in a banking company does not guarantee auditor switching. Third, Management Change has a significant influence on auditor switching because management wants a KAP that can meet management's needs in managing the company. Finally, Financial Distress has a significant influence on auditor switching because when a company experiences financial distress, the company will make a change of KAP. The potential bankruptcy experienced by the company causes company management to try to prevent bankruptcy which results in liquidation.

The Influence of Institutional Ownership, Audit Committee, Independent Commissioner, Auditors Switching on The Integrity of Financial Statement and Audit Quality as a Moderation Variable in Manufactured Companies Listed on The Indonesian Stock Exchange in 2017-2021

This research aims to determine the influence of institutional ownership, audit committee, independent commissioners, and auditors switching on the integrity of financial reports in consumer goods industrial sector companies listed on the Indonesia Stock Exchange. This research also aims to determine whether audit quality can be used as a moderating variable for the relationship between institutional ownership, audit committee, independent commissioner, auditor switching, and financial report integrity. The research design carried out was causal relationship research with a quantitative approach. The sample in this research was 35 companies in the consumer goods industry sector listed on the Indonesia Stock Exchange in 2017-2021. The type of data used in this research is secondary data. The sample research technique uses purposive sampling. The data analysis technique uses multiple linear regression analysis and a residual test for moderating variables. The results of this study show that partially institutional ownership and auditors switching have a positive and significant effect on the company's financial performance. Meanwhile, the audit committee and independent commissioners do not significantly influence the integrity of financial reports. Other results also show that audit quality can moderate the influence of institutional ownership and change of auditors but cannot significantly moderate the audit committee and independent commissioners on the integrity of financial reports in manufacturing companies in the consumer goods industry listed on the Indonesia Stock Exchange. Keywords: institutional ownership, audit committee, independent commissioner, change of auditor, financial report integrity, audit quality

Detection of Potential Financial Statement Fraud Using the Fraud Hexagon Model Approach (Empirical Study of LQ 45 Companies Listed on the IDX in 2018–2022)

The researcher intends to assess and identify fraudulent financial reporting by examining LQ 45 index companies listed on the Indonesia Stock Exchange for the period 2018–2022. The fraud hexagon, which consists of pressure, opportunity, capability, rationalization, arrogance, and collusion, is used to measure fraudulent financial reporting. Purposive sampling technique was used to obtain a sample of 125 data. Using the Eviews 12 program, researchers conducted a quantitative descriptive study using a panel data regression analysis approach using the Common Effect Model (CEM). The findings of this study indicate that pressure on financial stability significantly influences the potential for fraudulent financial reporting. Meanwhile, opportunities through ineffective monitoring, capability seen from changes in directors, rationalization seen from changes in auditors, arrogance seen from the number of CEO photos, and collusion seen from cooperation with government projects have no significant effect on the potential for financial fraud. reporting.

Fraudulent Financial Statement on The Property and Real Estate Sector in Indonesia and Malaysia

Purposes: The research aims to test and determine the influence of the components in the fraud hexagon on fraudulent financial statements.Methods: The population in this research are property and real estate sector companies listed on the Indonesia Stock Exchange and Malaysia Stock Exchange in 2020-2022. The study’s sampling technique used purposive sampling to obtain 77 companies with 187 units of analysis. Data were analyzed by panel data regression analysis using Eviews 12.Findings: The results show that financial targets, the nature of the industry, and ineffective monitoring positively and significantly affect fraudulent financial statements. Meanwhile, external pressure and the frequent number of CEO pictures reduce fraudulent financial statements. As for director experience, political connections and changes in auditors do not affect fraudulent financial statements.Novelty: Novelty in this research, namely the use of populations in Indonesia and Malaysia. The proxy used to represent the capability element also uses the director experience variable, which is rarely used in previous research.

Pengaruh Profitabilitas, Solvabilitas, Auditor Switching, dan Ukuran Perusahaan Terhadap Penyelesaian Audit (Audit Delay) (Studi Empiris Pada Perusahaan Manufaktur yang Terdaftar di Bursa Efek Indonesia Periode 2017-2021)

This study aims to determine the effect of profitability, solvability, auditors switching, and company size in manufacturing companies in the various industrial sectors listed on the Indonesia Stock Exchange (IDX) for the 2017-2021 period. The research method used in this study is a quantitative approach using a descriptive method in which the results of research data are in the form of presentation of statistical results obtained using Eviews 12 software. This research uses secondary data. Sampling using technique purposive sampling and there are 21 manufacturing companies in various industrial sectors with a five-year period. 
 Based on the analysis that has been carried out in this study, the results show that the influence of the profitability and solvability variables is a significant negative effect on audit delay, then the auditor switching variable has a significant positive effect and firm size does not have a significant effect on audit delay. Thus, companies that have good profitability and solvability will reduce audit delay because management will speed up the publication of financial reports. Then the change of auditors will extend the audit delay because the new auditor must adapt again to company conditions, and the size of a company size must pay attention to audit delay because it will attract investors, and avoid sanctions.

Auditor changes and management's issuance of earnings forecasts

AbstractAuditor changes are significant corporate events marking disruptions in the auditor‐client relationship. Prior studies have primarily examined the impact of such changes on audit quality and investment decisions of market participants. We study the effect of auditor changes on the voluntary disclosure of forward‐looking information. Managers may choose to reduce disclosure due to the possible adverse effect of the disruptions on disclosure credibility. Alternatively, shareholders may demand increased disclosure to intensify monitoring, as the auditor change signals potential issues between the company and the auditor. Employing multiple identification strategies, we find that firms are less likely to issue management earnings forecasts (MEFs) following auditor changes. We also find that governance quality mitigates the negative impact of auditor changes on the issuance of MEFs. Additionally, auditor changes are associated with lower market reactions to forecast releases. The overall evidence is consistent with the notion of reduced forecast credibility. Lastly, we conduct cross‐sectional analyses on characteristics of the auditor changes and find evidence consistent with signaling and anticipated successor audit quality to be underlying mechanisms for the association between auditor changes and MEFs. Our study provides the first large sample evidence that auditor changes have a disruptive effect on the voluntary disclosure of forward‐looking information.