The effect of audit firm tenure in artificial rotation on audit quality
Journal Title: Journal of Economics, Business, & Accountancy Ventura - Year 2014, Vol 17, Issue 3
Abstract
This study aimed to examine the effect of auditor tenure in artificial rotation on audit quality. Tenure shows the relationship between the audit firms and a client that is measured in years. Artificial rotation of auditor (audit firm) indicates a condition that, conceptually, there has been a change of auditors leading to the auditor relationship with the client to be disconnected, whereas substantive auditor-client relationship is ongoing. Formally, the auditor does not violate the rules and is still able to audit for the same client. Yet, in the long-term, it could affect the audit quality. The longer auditor tenure, the closer auditor-client relationship is. Thus, the auditor accommodates the interests of the client at the client's financial statements, including the practice of discretionary accruals as a proxy for audit quality. The samples were selected by purposive sampling method of the companies listed in Indonesia Stock Exchange from the year 2002-2010, with multiple linear regression approach. It shows that tenure, and total assets do not affect the quality of the audit while the size of the audit firm, and debt statistically have significant effect on audit quality. Future studies may extend the period of observation, and using other audit quality measures, such as fraud, and the propensity of auditor to issue going concern opinion..
Authors and Affiliations
Junaidi Junaidi, Harun Pamungkas Apriyanto, Nurdiono Nurdiono, Eko Suwardi
Keywords
Related Articles
- EP ID EP468547
- DOI 10.14414/jebav.v17i3.365
- Views 80
- Downloads 0
Publicness and strategic planning of public institutions: Evidence from Indonesia
Strategic planning has become a very common practice in public organizations. Research shows the positive impacts of strategic planning on the firm performance. This study examines the impacts of publicness on planning f...
The effect of audit committee role and sharia supervisory board role on financial reporting quality at Islamic banks in Indonesia
This research examines the effect of audit committee role and sharia supervisory board role on financial reporting quality. The data is provided from 33 Islamic banks in Indonesia that were taken by questionnaire from 17...
Abnormal Return and the Charactersitics of Merger and Acquisition in Indonesia
Indonesia also have experienced the practice of Merger and Acquisition (M & A) transaction, like other parts of the world. This study aims to see if there are abnormal returns for the acquirer companies in M&A transact...
Analysis of Factors Affecting The Disclosure of Islamic Social Reporting (Empirical Studies on The Shariah Compliant Companies in The Sharia Securities List).
The aim of this study is to obtain empirical evidence about factors that affect Islamic Social Reporting (ISR) in the Sharia compliant companies in Indonesia. The factors that used in this study are: company size, profit...
Improving the competitive advantage through information technology: A case at food and beverage industries in Indonesia
This study attempts to investigate the effect of Information Technology (IT) on competitive advantage, especially food and beverage industry in South Sulawesi, Indonesia. The research used survey approach and the data we...