The Influence of Social Ties, Audit Tenure and Audit Fee towards Audit Quality

Authors

  • Teguh Ariyanto S.E Airlangga University, Indonesia
  • Dr. Zaenal Fanani SE Airlangga University, Surabaya, Indonesia
  • MSA.Ak Airlangga University, Surabaya, Indonesia

DOI:

https://doi.org/10.31695/IJASRE.2020.33902

Keywords:

Social Ties, Audit Tenure, Audit Fees, Audit Quality

Abstract

This research is a quantitative study which aims to obtain empirical evidence regarding the influence of the external auditor's social ties with the CEO / CFO, the external auditor's social ties with the audit committee, audit tenure, and audit fees on audit quality. The sample of this research is 166 manufacturing companies which are listed on the Indonesia Stock Exchange (IDX) in the period 2017 to 2018. The data collection uses the purposive sampling. The data analysis technique used multiple regression statistical tests and T statistical tests.

The results of this study indicate that the influence of the auditor's external social ties with the CEO / CFO on audit quality shows no significant effect (0.594> 0.1). The second hypothesis is that the effect of the auditor's external social ties with the audit committee shows no significant effect (0.946> 0.1). The third hypothesis, the effect of audit tenure on audit quality, shows no significant effect (0.217> 0.1). The fourth hypothesis, the effect of audit fees on audit quality, shows that there is no significant effect (0.331> 0.1). It can be that the external auditors have worked professionally and independently which, despite the existence of social and economic ties, it does not affect the assessment of an external auditor.

References

Arens, A. A., Elder, R. J., & Beasley, M. S. (2008). Auditing dan jasa Assurance. Jakarta: Erlangga.

Bertrand, M., & Schoar, A. (2003). Managing with style: The effect of managers on firm policies. The Quarterly journal of economics, 118(4), 1169-1208.

Carcello, J. V., & Neal, T. L. (2003). Audit committee characteristics and auditor dismissals following “new” going-concern reports. The Accounting Review, 78(1), 95-117.

Carey, P., & Simnett, R. (2006). Audit partner tenure and audit quality. The Accounting Review, 81(3), 653-676.

Dao, M., Raghunandan, K., & Rama, D. V. (2011). Shareholder voting on auditor selection, audit fees, and audit quality. The Accounting Review, 87(1), 149-171.

Fahmi, I. (2012). Pengantar pasar modal: panduan bagi para akademisi dan praktisi bisnis dalam memahami pasar modal Indonesia: Penerbit Alfabeta.

GAO, G. A. O. (1986). CPA Audit Quality Many Governmental Audits Do Not Comply With Professional Standards. United STates.

Garcia-Blandon, J., & Argiles, J. M. (2015). Audit firm tenure and independence: A comprehensive investigation of audit qualifications in Spain. Journal of International Accounting, Auditing and Taxation, 24, 82-93.

Ghosh, A., & Moon, D. (2005). Auditor tenure and perceptions of audit quality. The Accounting Review, 80(2), 585-612.

González-Díaz, B., García-Fernández, R., & López-Díaz, A. (2014). Auditor tenure and audit quality in Spanish state-owned foundations. Revista de Contabilidad, 18(2), 115-126.

Guan, Y., Su, L. N., Wu, D., & Yang, Z. (2016). Do school ties between auditors and client executives influence audit outcomes? Journal of accounting and economics, 61(2-3), 506-525.

Guna, W. I., & Herawaty, A. (2010). Pengaruh mekanisme good corporate governance, independensi auditor, kualitas audit dan faktor lainnya terhadap manajemen laba. Jurnal bisnis dan akuntansi, 12(1), 53-68.

Habib, A., & Hossain, M. (2013). CEO/CFO characteristics and financial reporting quality: A review. Research in Accounting Regulation, 25(1), 88-100.

Harahap, D., Majidah, M., & Triyanto, D. (2017). Pengujian Fraud Diamond Terhadap Kecurangan Laporan Keuangan. eProceedings of Management, 4(1).

He, X., Pittman, J. A., Rui, O. M., & Wu, D. (2017). Do social ties between external auditors and audit committee members affect audit quality? The Accounting Review, 92(5), 61-87.

Hoitash, R., Markelevich, A., & Barragato, C. A. (2007). Auditor fees and audit quality. Managerial Auditing Journal, 22(8), 761-786.

Knechel, W. R., & Vanstraelen, A. (2007). The relationship between auditor tenure and audit quality implied by going concern opinions. AUDITING: A journal of practice & theory, 26(1), 113-131.

Kwak, B. J., & Yu, J. Y. (2015). The Effect of CEO/CFO Ties to Auditors through Outside Directorship on Auditor Selection and Subsequent Audit Quality. 한국회계학회 학술발표논문집, 2015(1), 1113-1160.

Kwon, S. Y., & Yi, H. (2017). Do Social Ties between CEOs and Engagement Audit Partners Affect Audit Quality and Audit Fees? Auditing: A Journal of Practice and Theory.

Levitt, A., & Securities, U. (2000). Speech by SEC chairman: Remarks before the conference on the rise and effectiveness of new corporate governance standards. Federal Reserve Bank, New York,[Online] Available: http://www. sec. gov/news/speech/spch449. htm on, 19(10), 2009.

Qi, B., Yang, R., & Tian, G. (2017). Do social ties between individual auditors and client CEOs/CFOs matter to audit quality? Asia-Pacific Journal of Accounting & Economics, 24(3-4), 440-463.

Rinanda, N., & Nurbaiti, A. (2018). Pengaruh Audit Tenure, Fee Audit, Ukuran Kantor Akuntan Publik Dan Spesialisasi Auditor Terhadap Kualitas Audit (studi Pada Perusahaan Manufaktur Subsektor Aneka Industri Yang Terdaftar Di Bursa Efek Indonesia Tahun Periode 2012-2016). eProceedings of Management, 5(2).

Singgih, E. M., & Bawono, I. R. (2010). Pengaruh Independensi, Pengalaman, Due Professional Care dan Akuntabilitas Terhadap Kualitas Audit. Simposium Nasional Akuntansi XIII, 1-21.

Suwito, E., & Herawaty, A. (2012). Analisis pengaruh karakteristik perusahaan terhadap tindakan perataan laba yang dilakukan oleh perusahaan yang terdaftar di Bursa Efek Jakarta.

wiryanto. (2000). Teori Komunikasi Masa. In: Gramedia Widiasarana Indonesia,Jakarta.

Yuniarti, R. (2011). Audit firm size, audit fee and audit quality.

Downloads

How to Cite

Teguh Ariyanto S.E, Dr. Zaenal Fanani SE, & MSA.Ak. (2020). The Influence of Social Ties, Audit Tenure and Audit Fee towards Audit Quality. International Journal of Advances in Scientific Research and Engineering (IJASRE), ISSN:2454-8006, DOI: 10.31695/IJASRE, 6(10), 138–145. https://doi.org/10.31695/IJASRE.2020.33902

Issue

Section

Articles