AN EXPERIMENTAL STUDY: AUDIT QUALITY IMPORTANCE ON SELECTING A PUBLIC ACCOUNTANT FIRM (PAF)
Keywords:Audit Quality, PAF Selection, Auditor Selection, Experimental Study
The study aims to emphasize the importance of knowledges of audit quality on Public Accountant Firm (PAF) selection for a company by employing 2x1 factorial design between-subject. To achieve this goal, we identified differences between experiment and control groups. The experiment group was given knowledges of audit quality, while the control group had no treatment during the process selection of PAF. There were ten indicators used in term of audit quality, namely audit workload, business expertise, audit turnover, audit hours, result of employee satisfaction surveys, partner compensation, result of client satisfaction surveys, PCAOB inspection results, restatements on audit report, and litigation of PAF. Further, these indicators were classified into input and output in audit process. The result revealed a significant difference between experiment and control group. It is concluded that group which was equipped with knowledges of audit quality can reduce bias in PAF selection decision.
Abdulmalik, S. and Ahmad, A. C. (2016). Audit fees, corporate governance mechanisms, and financial reporting quality in Nigeria. DLSU Business & Economics Review, 26(1), 122–135.
Aghazadeh, S and Hoang, K. (2020). How does audit firm emphasis on client relationship quality influence auditors’ inferences about and responses to potential persuasion in client communications?. Accounting, Organizations and Society, Available online 6 September 2020, 101175.
Appelgren, Leif. (2020). A survey of models for determining optimal audit strategies. Advances in Accounting 48 (2020) 100455.
Arens, Randal and Mark. (2008). Auditing dan Jasa Assurance (Pendekatan Terintegrasi). Twelve Edition. 1st Edition. Jakarta: Penerbit Erlangga
Ball, R. A. Y. (2009). Market and Political Regulatory on the Recent Perspectives Accounting Scandals. Journal of Accounting Research, 47(2), 277–323. http://doi.org/10.1111/j.l475679X.2009.00325.x
Bills, K. L., Cobabe, Matthew, and Pittman, J. (2020). To share or not to share: The importance of peer firm similarity to auditor choice. Accepted in Accounting, Organizations and Society journal. https://doi.org/10.1016/j.aos.2020.101115 0361-3682/
Boland, C., Brown, V., and Dickins, D. 2016. PCAOB inspections on the audit process and audit standard setting. Working paper presented at the 2017 AAA Auditing Mid-year Meeting.
Chen, J. et al. (2020). Does Audit Partner Workload Compression Affect Audit Quality?. European Accounting Review, 2020. DOI: https://doi.org/10.1080/09638180.2020.1726196
Chu, B and Hsu, Y. (2017). Non-audit services and audit quality—the effect of Sarbanes-Oxley Act. Asia Pasific Management Review xxx (2017) 1-8. DOI: https://doi.org/10.1016/j.apmrv.2017.07.004
Defond, M. L., and Francis, J. R. (2005). Audit Research after Sarbanes Oxley. Auditing: A Journal of Practice & Theory 24(Supplement 2005), 5–30.
DeZoort, F.T dan Lord A.T. (1997). A Review and Synthesis of Pressure Effects Research in Accounting. Journal o f Accounting Literature Vol. 16 (1997): 28-85.
Dickins, D., Johnson-Snyder, A.J., and Reisch, J. T. (2018). Selecting an auditor for Bradco using indicators of audit quality. Journal of Accounting Education 45 (2018) 32–44
Etzioni A. (2010). Behavioral economics: A Methodological Note. Journal of Economic.
Harris, K. and Williams, T. (2020). Audit quality indicators: Perspectives from Non-Big Four audit firms and small company audit committees. Advances in Accounting Volume 50, September 2020, 100485.
Heo, J. S., Kwon, S. Y, and Tan, H. (2020). Auditors’ Responses to Workload Imbalance and the Impact on Audit Quality. Contemporary Accounting Research Journal. https://doi.org/10.1111/1911-3846.12612.
Hsieh, T. S., et al. (2020). Seeing is believing? Executives' facial trustworthiness, auditor tenure, and audit fees. Journal of Accounting and Economics Volume 69, Issue 1, February 2020, 101260.
Https://jdih.kemenkeu.go.id/fullText/2008/17~PMK.01~2008Per.HTM. “Peraturan Menteri Keuangan Nomor 17/PMK.01/2008. Accessed on date February 20, 2020.
Https://edition.cnn.com/2013/07/02/us/enron-fast-facts/index.html. Accessed on date July 14, 2020.
Ikatan Akuntan Indonesia. (2001). Standar Profesional Akuntan Publik. Salemba Empat.
Joshi, P. L., Ajmi, J. A., dan Bremser, W. G. (2009). A study of auditor–client relationships and problems in the Bahraini audit environment. Advances in Accounting, incorporating Advances in International Accounting 25 (2009) 266–277
Kang, M. et al. (2019). Audit Firm Attributes and Auditor Litigation Risk. A Journal of Accounting , Finance and Business studies (ABACUS). DOI: 10.1111/abac.12171
Li, X. (Daniel), Sun, L. and Ettredge, M. (2017). Auditor selection following auditor turnover: Do peers' choices matter?. Accounting, Organizations and Society 2017, 1-15. http://dx.doi.org/10.1016/j.aos.2017.03.001 0361-3682/
Ocak, M., Kablan, A. and Dursun, G. D. (2020). Does auditing multiple clients affiliated with the same business group reduce audit quality? Evidence from an emerging market. Available online at http://www.elsevier.com/journals/borsa-istanbul-review/2214-8450.
Simon Dekeyser, S. et al., (2019). Evidence of Industry Scale Effects on Audit Hours, Billing Rates, and Pricing. Contemporary Accounting Research Vol 36 (2). DOI: https://doi.org/10.1111/1911-3846.12460
Sridharan, U. V. et al. (2002). Financial Statement Transparencyand Auditor Responsibility:Enron and Andersen. International Journal of Auditing. 6: 277-286 (2002). DOI: https://doi.org/10.1111/j.1099-1123.2002.tb00018.x
Sun, J., et al. (2020). Does sharing the same network auditor in group affiliated firms affect audit quality?. J. Account. Public Policy 39 (2020) 106711.
Sugiyono. (2015). Management Research Methods. Bandung: Alfabeta.
Xiao, T., Chunxiao, and Yuan, C. (2020). How audit effort affects audit quality: An audit process and audit output perspective. China Journal of Accounting Research 13 (2020) 109–127.
Yu-Shu, C., Yi-Pei, L., & Chu-Yang, C. (2009). The association between auditor quality and human capital. Managerial Auditing Journal, 24(6), 523–541. http://doi.org/10.1108/0268690091 0966512.
Copyright (c) 2020 RINarxiv
This work is licensed under a Creative Commons Attribution 4.0 International License.