Audit quality in Indonesian manufacturing companies using a moderating regression analysis approach

Riantika, Reny Lia and Putri, Salsabilla Widya (2024) Audit quality in Indonesian manufacturing companies using a moderating regression analysis approach. In: International Conference On Accounting & Business (ICAB) 2024, 18-19 Sept 2024, Universiti Teknologi MARA, Perak Branch Tapah Campus.
Abstract

Audit quality is vital because it aims to optimize management efficiency using financial reports. Several factors can influence audit quality, including Audit Tenure, Audit Firm Size, Audit Report Lag, and Audit Fees. This research analyzes the impact of Audit Tenure, Audit Firm Size, and Audit Report Lag on Audit Quality, with Audit Fees as a moderating variable. The population studied was manufacturing companies listed on the Indonesia Stock Exchange in 2019-2022. A pandemic known as COVID-19 emerged amidst economic growth, which caused all business subsectors in Indonesia to have a negative impact. One of the sectors affected is the manufacturing industry. The impacs is an increase in investment risk and the cost of equity capital in a company can occur due to the low trust of shareholders in financial statements. This often happens when companies need to ensure the quality of audit procedures. This research used 356 sample. Data analysis was carried out using Moderating Regression Analysis (MRA). The results show that audit tenure and audit firm size positively influence audit quality, while audit report lag negatively influences audit quality. Then it was also found that audit fees strengthen the influence of audit report lag on audit quality. Meanwhile, audit fees cannot moderate the influence of audit tenure and audit firm size based on audit quality. This result illustrates that company management must strive to minimize audit report lag by improving internal processes and promptly providing the necessary information to auditors to increase the relevance and quality of financial reports.

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