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 85
- Downloads 0
Economic, social and environmental disclosure, a theoretical framework and its application in Vietnam
This study focuses on the appraisal of firms performance and on its representation and reporting. Using interviews and inquiries in firms operating in the cement industry in Vietnam, two points are investigated. First, w...
Tax Compliance: Between Intrinsic Religiosity and Extrinsic Religiosity
This study examined the correlation between intention on tax compliance and tax compliance behavior with the moderating variable of religiosity orientation both intrinsic religiosity and extrinsic religiosity. The religi...
The effect of internal control and anti-fraud awareness on fraud prevention (A survey on inter-governmental organizations)
The objectives of this research are to analyze the effect of internal control and anti-fraud awareness on the fraud prevention in inter-governmental organization. Fraud prevention is devoted in the procurement process. T...
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...
The impact of earnings-announcement timing on technical analysis signal: The case of Indonesia
This study discusses technical analysis signal and earnings-announcements timing. Technical analysis signal is used to capture price reaction around earnings announcement dates. Technical analysis is selected because it...