Client's Financial Statements Research Articles

Pengaruh Akuntabilitas, Independensi, dan Pengalaman Kerja Terhadap Kualitas Audit

This research aims to examine the influence of accountability, independency, and work experience on audit quality at Public Accounting Firms in Padang City. Primary data was obtained from questionnaires filled out by respondents. The sample used in this research was the auditors of the Public Accounting Firm in Padang City, totaling 60 people. The statistical data analysis technique used in this research in multiple regression analysis. The research results show that accountability has a significant positive effect on audit quality at the Public Accounting Firm in Padang City. Meanwhile, independency and work experience have no effect on audit quality at the Public Accounting Firm in Padang City. The implication of this research is in the form of relevant information that companies and auditors should maintain credibility in preparing financial reports so as not to harm the entity, auditor and third parties. Therefore, correct and precise information is needed from the results of an audit of a client's financial statements in a company, this will determine the decisions that will be taken, such decisions as granting credit, investment, acquisitions, and so on. This audited financial report will be provided to the party who requires the results, where it will be used for making decisions in the company.

PENGARUH FEE AUDIT, INDEPENDENSI DAN UKURAN KAP TERHADAP KUALITAS AUDIT PADA KANTOR AKUNTAN PUBLIK DI WILAYAH JAKARTA SELATAN

Audit quality is all possibilities where when auditing the client's financial statements can find violations that occur in the client's accounting system. An auditor is required to produce high quality and good work, because the auditor has a great responsibility to various parties with an interest in the financial statements of a company, including the public. This study aims to provide empirical evidence of the effect of audit fees, independence and KAP size on audit quality. Based on the Public Accountant Professional Standards (SPAP) the audit carried out by the auditor is said to be of good quality, if it meets general standards, fieldwork standards and reporting standards. Data analysis methods in this study consisted of descriptive statistical analysis, data quality testing, classical assumption testing, and hypothesis testing. After conducting the test, the research results obtained from the t statistical test for audit fees which have a significance value of 0.031 (<0.05), independence has a significance value of 0.0005 (<0.05) and KAP size with a significance value of 0.3455 (>0.05). Based on these results, the researcher draws the conclusion that audit fees have a negative effect on audit quality, independence has a positive effect on audit quality and KAP size has no effect on audit quality.

Effect of Audit Tenure, Audit Fee, Size of Public Accounting Firm, Auditor Specialization, and Audit Rotation on Audit Quality

Audit quality is all possibilities (probability) where the auditor when auditing the client's financial statements can find violations that occur in the client's accounting system and report them in the audited financial statements, where in carrying out their duties the auditor is guided by auditing standards and the relevant public accountant code of ethics. This study aims to examine the effect of audit tenure, audit fees, size of public accounting firm, auditor specialization, and audit rotation on audit quality. Audit quality is measured using a dummy variable by looking at going concern opinions made by independent auditors, audit fees are measured by Ln (natural logarithm), audit tenure is measured by calculating the number of years in which the same auditor has engaged the client, size of public accounting firm, specialization auditors, and rotation is measured using a dummy variable. The population in this study are Transportation and Logistics Service companies listed on the Indonesia Stock Exchange (IDX) for the 2017-2021 period which have been audited. The sample selection was carried out using purposive sampling method. The analytical method used to test the hypothesis is logistic regression analysis. The results of this study indicate that audit specialization has an effect on audit quality, while audit tenure, audit fees, size of a public accounting firm, and audit rotation have no effect on audit quality.

Earnings management contagion: evidence from institutional equivalence

PurposeThe study aims to investigate how the presence and absence of institutional equivalents (interaction of industry peers and local peers) affect the earnings management practices of firms.Design/methodology/approachThe study uses discretionary accruals to operationalize earnings management. A sample of 18,744 Bombay Stock Exchange (BSE) listed firm years spanning over 12 financial years (March 2010–March 2021) has been considered and analyzed through panel data regression models.FindingsThe author’s results show that the earnings management practices of a firm's institutional equivalents and the firm's own earnings management are positively associated, implying that firms closely follow their institutional equivalents. This association is found to be more pronounced among focal firms when the difference between the earnings management levels of industry peers and local peers is greater. Further, the author find that large firms aggressively imitate their industry peers and local peers, whereas profitability does not influence their imitation behavior.Practical implicationsThe author’s findings have implications for understanding peer imitation processes, particularly when firms face increasingly multifaceted institutional environments. It suggests auditors and analysts take into account the earnings management practices of local and industry peers while analyzing the client's financial statements and making forecasts, respectively.Originality/valueThe study is among the pioneering attempts to explore the domain of earnings management from the lens of institutional equivalence and provides compelling evidence that the interaction of industry peers and local peers impacts the earnings management practices of firms.

The Effect of Due Professional Care and Audit Evidence on The Appropriateness of Giving an Audit Opinion

The auditor has an important role in the client's financial statements so that the auditor can produce an appropriate and quality audit opinion. The occurrence of cases of auditors giving inappropriate assessments or evaluations and audit opinions on the client's financial statements due to a lack of due professional care and audit evidence owned by the auditor. This study aims to determine how much influence due professional care and audit evidence have on the accuracy of giving an audit opinion. The research method used is quantitative research with descriptive and verification with a survey approach, which in this case seeks to describe and also interpret the influence between the variables to be studied and the aim is to present a structured and factual picture of the relationship between the variables studied. The sample used was 30 auditors from 6 Public Accounting Firms in the East Bandung area. The analysis used in this study is Multiple Linear Regression, Coefficient of Determination, Correlation Coefficient, and T-test with calculations using SPSS version 20 software. Based on this research, it can be concluded that due professional care and audit evidence has a positive and significant effect on the accuracy of giving audit opinions to auditors who work at the East Bandung Public Area Accounting Firm.

PENGARUH FEE AUDIT, AUDIT TENURE DAN UKURAN PERUSAHAAN TERHADAP KUALITAS AUDIT SYARIAH PADA PERUSAHAAN YANG TERDAFTAR DI JAKARTA ISLAMIC INDEKS TAHUN 2016–2020

Shariah audit quality is all the possibilities where when the auditor audits the client's financial statements they can find violations or fraud that occur in the reporting system that is not in accordance with accounting principles and Islamic principles. The purpose of this study was to determine and examine audit fees, audit tenure and company size on sharia audit quality in companies listed on the Jakarta Islamic Index. The population in this study are companies listed on the Jakarta Islamic Index from 2016-2020. Sampling using purposive sampling method in accordance with the criteria for the determination of the sample. The number of samples used in this study were 40 samples with 8 companies and 5 years of research period. The analysis used is logistic regression analysis. The results of the study show that the coefficient of determination has a value of 0.240 or 24%, which means that audit quality can be explained by the three variables by 24%, while the rest is influenced by other variables outside the study. The results also show that the audit fee variable and firm size have no effect on audit quality, while the audit tenure variable has a negative coefficient on sharia audit quality.
 
 Keywords: Audit Fees, Audit Tenure, Company Size, Sharia Audit Quality

Emerging technology and auditing practice: analysis for future directions

PurposeThe purpose of this paper is to explore the effects of emerging technology (technology adoption, perceived benefits, technological challenges and ease of use) and the auditing practice of accounting professionals.Design/methodology/approachThe primary method of data collection was a questionnaire directed to newly practicing chartered accountants who are partners of sole proprietorship or partnership firms in India. The data were analyzed by using partial least squares structural equation modeling (PLS-SEM).FindingsThe findings revealed that there is a positive and significant relationship between characteristics of emerging technology (technology adoption, technological challenges and ease of use) and auditing practice, while factors of the perceived benefits had a negative relationship with auditing practice.Research limitations/implicationsThe study model would aid technology enabled audit research by giving a platform for a new study to investigate further detailed solutions to emerging information technology determinants.Practical implicationsThis study illustrates how tools technique perceived benefit motivates sole proprietorship practicing auditors to adopt emerging technology- enabled auditing software for auditing client's financial statements. Further, this study has added to the information technology auditing literature and might add benefits to the numerous other audit firms to adopt in emerging technology tools their audit firm.Social implicationsAudit firms, generally sole proprietorship and partnership firms, should be given enough awareness about the latest audit software tools to carry out their audit tasks efficiently.Originality/valueThe study findings highlight benefits of emerging technology-enabled auditing practice among owners/partners of the sole proprietorship or partnership firms, which is not extensively discussed in the prior studies. Furthermore, it broadens knowledge of perceived benefit, technological challenges and ease of use in technology-enabled audit software in the auditing and accounting literature.

Pengaruh Tekanan Klien Dan Rotasi Audit Terhadap Independensi Auditor: Pendekatan Eksperimen

The auditor is an external party who will check and ensure that the client's financial statements are free from material misstatement so that the quality of the audit provided must be good. Therefore it is important for an auditor to have an independent attitude. Independence is a basic attitude that must be possessed by an auditor because the auditor is required to be impartial to one party. But in reality, to maintain independence is not easy. One of the factors that affect the independence of an auditor is client pressure. In previous studies, it was found that client pressure was able to affect auditor independence because the pressure was related to audit fees. With the pressure there is a possibility of decreasing the level of auditor independence. In order to maintain independence, an effort is needed, one of which is auditor rotation. Auditor rotation is auditor rotation that must be carried out by the company, with the aim of producing good audit quality and maintaining auditor independence. Auditor rotation is also carried out to prevent a close relationship between the auditor and his client. Based on these circumstances, this study was conducted to examine the effect of audit rotation and client pressure on independence. Data collection was carried out through the 2 X 2 experimental method between subjects. The participants in this research experiment were students, lecturers/teachers, auditors and other occupations. The experiment was carried out using the help of information technology. The experimental task given is an adjustment audit. The results showed that client pressure had an effect on auditor independence and auditor rotation was able to increase auditor independence. However, the results of this study have not been able to prove interaction hypothesis between client pressure and auditor rotation on auditor independence.

Does Audit Lag Become a Signal of Going-Concern Audit Opinion?

Going-concern opinion is an auditor's opinion based on the client's financial statements, which have financial problems. The company avoids this opinion because it will significantly affect the attitude of investors in the future. This study analyzes various factors that potentially affect the provision of going-concern audit opinions in Indonesia Stock Exchange (IDX) manufacturing companies during 2017-2019. They are audit tenure, company size, opinion shopping, and audit report lag. The results show that audit tenure, company size, and opinion shopping significantly negatively impact the acceptance of going-concern audit opinion. In contrast, audit report lag is not related to the acceptance of going-concern audit opinion. These research findings indicate that investors should not use the delay of financial statement issuance to the public as a benchmark for a company experiencing financial or operational problems.

The Effect of Role Conflict and Ethical Sensitivity on Auditor Performance with Moderation of Emotional Intelligence

Auditors are required to be professional to carry out their duties properly in examining the client's financial statements to provide benefits to the client and interested parties on the audit results. However, this professional attitude cannot be separated from the auditor's role conflict and his ability to make ethical decisions. Therefore, this study aimed to examine the effect of role conflict and ethical sensitivity in improving the auditor’s performance using emotional intelligence as a moderating variable. The cluster sampling technique was used to determine the number of samples, as many as 86 auditors at the Medan City Public Accounting Firm. The data was collected using a questionnaire method. Fifty-six auditors were used for hypothesis testing and research analysis, while 30 other auditors were used to determine validity and reliability tests. This study uses a structural equation model to test the hypothesis. The results show that role conflict harms auditor performance, while ethical sensitivity increases auditor performance. On the other hand, emotional intelligence does not mediate the effect of role conflict and ethical sensitivity on auditor performance. The implication of the results of this study is the need for public accounting firms to manage internal competition between auditors so as not to lead to personal conflicts that can decrease audit quality. Public accounting firms also need to develop an ethical culture among their auditors.

The Impact of Integrity, Professionalism, and Self-Efficacy of Auditors on Audit Quality

Audit quality is a finding of violations by the auditor in recording the client's financial statements. Audit quality is strongly influenced by the auditor as the party auditing the financial statements, so the auditor needs to follow and carry out his duties by the auditing standards that apply during the audit process. This investigation expects to analyze the impact of integrity, professionalism, and self-efficacy of auditors on audit quality. The populace in this investigation were all autonomous auditors who work in Public Accounting Firm which are enlisted with the Republic of Indonesia's Financial Audit institution. The sampling technique used in this study was simple random sampling. Data collection techniques in this study using library research and questionnaires. Hypothesis testing in this study uses multiple regression data analysis techniques using SPSS version 25.0. The results of this study indicate that integrity, professionalism, and self-efficacy have a positive effect on audit quality. The implications of this research are academic implications to determine the factors that can affect audit quality and can be used as material for developing research and knowledge, especially in the field of accounting related to audit quality and practical implications for developing further research in the auditing field.

How Audit Firm Size Moderate Effect of TOE Context toward Auditor Adoption of Technology

Our research aim was determine the financial auditor acceptance regarding supporting software assistance facing industry 4.0 to assist them in client financial statement audit. This research instrument refers to Technology Organization Environment (TOE) approach, and audit firm size. This research is a quantitative research that uses primary data in the form of questionnaires distributed to research objects, which is auditors who work in public accountant offices. This study examines hypotheses between variables using path analysis, structural equation modelling partial least square (SEM PLS), while the independent variables in this study are technology context, organization context and environment context while firm size become moderating variable and the dependent variable are auditor adoption of technology. The results of this study are to knowing the adoption of auditors in information technology in their work processes. It is expected that it will provide an overview financial auditor expectations on applicable information and software, so that it can improve the quality of work to be more effective and efficient, especially in terms of time and energy. The results of this study are expected to provide an overview of the adoption of technology by financial auditors in professional audit firm.

The distraction effect of non-audit services on audit quality

Regulators have expressed concerns that an emphasis on non-audit services (NAS) could distract from the audit function, even for clients with minimal NAS purchases. Motivated by this concern, we examine whether a greater emphasis on providing NAS to audit clients generally (i.e., not to a specific client) can distract from the audit function, thus reducing audit quality. We find evidence of an NAS distraction effect, where a greater emphasis on NAS at the audit office-level results in more client financial statement restatements, even after controlling for client-specific NAS. Further, the association exists among clients that purchase minimal NAS, suggesting that this association relates to distraction effects in addition to independence issues examined in prior research. This study should be of interest to audit firms, audit committees, and regulators because it provides new evidence regarding issues related to a business model that includes both audit and non-audit services.

The Distraction Effect of Non-Audit Services on Audit Quality

Regulators have expressed concerns that an emphasis on non-audit services (NAS) could distract from the audit function, even for clients with minimal NAS purchases. Motivated by this concern, we examine whether a greater emphasis on providing NAS to audit clients generally (i.e., not to a specific client) can distract from the audit function, thus reducing audit quality. We find evidence of an NAS distraction effect, where a greater emphasis on NAS at the audit office-level results in more client financial statement restatements, even after controlling for client-specific NAS. Further, the association exists among clients that purchase minimal NAS, suggesting that this association relates to distraction effects in addition to independence issues examined in prior research. This study should be of interest to audit firms, audit committees, and regulators because it provides new evidence regarding issues related to a business model that includes both audit and non-audit services.

Konstruksi Akuntansi Kerugian, Praktik Kepailitan Mengungkap Fraud Laporan Keuangan Klien

The purpose of this study is to interpret the construction of accounting losses in disclosing fraud and the bankruptcy practices of client financial statements. The research method used is a qualitative method - the interpretive paradigm with a phenomenal approach with method triangulation is done by comparing information or data in different ways. To obtain the truth of reliable information and a complete picture of certain information, researchers can use interview and observation or observation methods to check the truth. In addition, researchers can also use different informants to check the correctness of the information. Triangulation of this stage is done if the data or information obtained from the subject or research informants is doubtful. The results of this study were filing bankruptcy at the Commercial Court involving a supervisory judge and curator. In determining the validity of accounts payable by a supervisory judge used the science of forensic accounting and loss accounting, with the curator in charge of distributing bankruptcy (assets) to creditors in the order of division of property for separatist creditors, Preferred creditors and congruent creditors (creditors who have no collateral). In general, fraud actions carried out by debtors are by hiding assets and sales while fraud is carried out with the motive to obtain bankruptcy (assets).

PENGARUH KODE ETIK, MATERIALITAS AUDIT DAN RISIKO AUDIT TERHADAP OPINI AUDITOR

This research aims to make case analyze the impact of business ethics, level of audit materiality and audit risk towards auditor opinion. For public accountant engaged in assurance services. The result expected to contribute to the audit process of the client's financial statements in order to improve the performance of public accountants and achieve the goals of public accountants. The respondents that used in this research are the public accountant who works in public accountant firms. Data was collected using a questionnaire. Method verification analysis was used to test hypothesis and structural modeling with Partial Least Square application that is SmartPLS 3rd version. Result of this research reveals that of the three variables; business ethics, audit materiality, and audit risk, only audit risk that does not have a significant effect on auditor opinion. Audit risk does not have a significant effect on auditor opinion because the public accountant feels a lot and complexity of the data that the auditor must examine and the component influences audit risk. Keywords: ethics, materiality, risk, auditor opinion.

PENGARUH ATURAN ETIKA TERHADAP KUALITAS AUDIT YANG DIMEDIASI OLEH PENGENDALIAN MUTU (SURVEI PADA AUDITOR BPK RI)

The fraud cases involving government auditors certainly erode public trust. The importance of improving audit quality to increase the public trust makes author interested in conducting research that seeks to measure the determinants of audit quality. Before Enron and Worldcom’s accounting scandal on 2001-2002, studies that measured audit quality generally still use KAP-size proxies. DeAngelo's (1981: 186), states that: "The quality of audit services is defined as a market-assessed joint venture, which will both (a) discover a breed of client's accounting system, and (b) report the breach". Ethical rules become independent variables in this study. In addition, author also added Expectancy Theory to mediate the relationship between ethical rules and audit quality represented by quality control variables. This model was inspired by Aldhizer et al. (1995) where the measure of audit quality can also be assessed from how much the level of adherence and appropriateness of the client's financial statements to the rules, laws, and applicable standards. The results of the study indicate that ethical rules have an influence on audit quality by mediating by quality control.Keywords : Ethics, Control, Audit.

Auditor Disclosure Benchmarking and Client Financial Statement Disaggregation

We examine auditors’ disclosure benchmarking, which we define as auditors’ acquisition of non-client financial statement information for the purpose of evaluating a client’s financial statement information. Employing a novel dataset that captures auditors’ access of non-client annual and quarterly SEC filings on EDGAR, we predict and find that auditors engage in disclosure benchmarking when auditing clients faced with higher levels of reporting complexity, financial reporting risk, and litigation risk. Lastly, we predict that auditors incorporate the information they obtain via disclosure benchmarking into their audit. Consistent with our prediction, disclosure benchmarking is positively associated with a client’s financial statement disaggregation, and client footnotes exhibit greater comparability to targeted non-clients’ footnotes after disclosure benchmarking. Overall, this study offers an empirical look into the “black box” of the audit process by examining auditor benchmarking and its effects on client financial reports.

Is there a gender effect on the quality of audit services?

Should we expect a gender effect on the quality of audit services? Both the behavioural economics literature and the glass ceiling for women in the audit profession suggest an affirmative answer to this question. We conduct the study with a sample of Spanish-listed companies for the period between 2008 and 2015 and use the quality of the client's financial statements as a proxy for the quality of audit services. The results provide sound and consistent support for a positive female auditor effect on the quality of audit services. Although our figures suggest that men and women tend to audit different types of clients, the results are not driven by these differences. Moreover, the gender effect occurs from the very first year of the appointment of a female partner to replace a male auditor. This study may contribute to challenging stereotypes and may be informative for the ongoing political debate regarding the under-representation of women in senior management levels.

Financial Reporting Fraud Schemes

The financial reporting fraud is still difficult to be detected because of a concealed and sophisticated nature of most fraud schemes, and a lack of effective fraud detection procedure. Fraud schemes have become more complex, sophisticated with the aid of advanced technology, and causes loss and damage to the financial community. A fraud scheme is the way (action) that fraudsters pursue to commit and conceal fraud through misrepresentation or omission of material facts (i.e. misrepresentation or omission of material amount, disclosure, or evidence in the financial reporting). Identifying fraud schemes is an important step for fraud detection. However, the identification of fraud schemes is still a challenging task because fraud schemes have become more complex and sophisticated with the aid of advanced technology and the concealment characteristic of fraud, which causes loss and damage to the financial community. The authoritative literature, SAS 99, 107, and International Standards on Auditing (ISA) 240, 315, and 330 require auditors to assess fraud risk factors (i.e. fraud schemes) and materiality in a client's financial statements. Then, auditors adjust their audit procedures (plan) to address identified fraud risk (schemes) in order to provide reasonable assurance whether the client's financial statements are free of material misstatements.